contract to assign

Hello all,

 I am pretty new to this site so here it goes:

   I have an assignable contract here that I have a 3 day old as-is appraisal for $468,000.  The contract price is $353,500.  The set closing date is Aug. 17.  Just needs new interior paint and maybe a possible kitchen remodel, depending on your tastes.  It is an attached SFR with rental comps in the area in the range of $2,000- $2,500.  Please let me know what you think!

Hopefully you also have comps that support the appraisal. Most buyers will trust comps more than appraisals. As far as holding as a rental, I think the price range is too high. If the market value is $468,000 like you say, it will probably be best as a rehab and resell.

I agree. Appraisals don’t mean anything. Buyers rely on comps.

Thanks, I’m going to ask for a CMA from my appraiser, and get realtor comps! :beer

What’s wrong with the comps used in the appraisal?

If the appraiser just completed an appraisal 3 days ago why on earth would he waste time doing a CMA? That’s definitely calling the appraiser a liar. Besides a CMA is a REALTOR’s opinion of value. There is a reason why banks hire appraisers to render an opinion of value. Not only are they required for certain federally regulated transactions but the appraiser has no stake in the value of the property. In my state it takes 3 years minimum for an appraiser to meet the requirements for licensure including the 180 hours of study and 1800 to 2500 hours of period. As of 2008 a college degree will even be required. A realtor in my local reia group informed me it takes a GED 160 hours of study and a $60 exam. An appraiser is now held criminally liable for their value opinions. Ask yourself if your realtor or if you are willing to go to jail over the comps you select to support the value on a flip if something happens or if the buyer defaults on a loan before you dismiss the work of an appraiser.


Comps from a Realtor reflect what people are willing to pay for a house. An appraisal is what a bank is willing to lend on a house.

For example, a house may appraise for $200K. But Realtor comps may show that people will pay $190K. Note the difference is only 5%.

If you base your ARV on an appraisal (which the majority tend to be higher than Realtor comps), then as an investor you will get burned. This has nothing to do with the professional credentials of an appraiser, it’s just the nature of the market.

I was thinking about that too, I think I will just stick with it. A conventional loan has never had an appraisal slashed through an appraisal revue with my appraiser, so I trust the property was not over appraised. I know typed words will not convince anybody, but I have it (the appraisal), and I am seeking some advice.

Thanks again all for blogging!

If you’re looking to wholesale, most investors will get comps from a real estate agent. If their comps are lower than your appraisal, then they will not buy at your price!

The original post said the AS IS value on the appraisal is $x.xx. It said nothing about the after repair value. Which is often referred to as a “subject to” appraisal as in subject to repairs.

Believe it or not the appraised value of a property depends on the interest of the person ordering the appraisal. It has everything to do with the purpose for which the appraisal will be used. If the appraisal is ordered by the bank and the purpose is to determine the market value of the property, it doesn’t matter how much the bank is willing to lend on it even though the report will be used to determine the loan value.

The market value is what ever price a reasonable buyer will pay. Based on that number in conjunction with other information (such as the borrower’s ability to repay, and past payment history etc) determines what the bank will lend on a particular property. Believe me I’ve had banks try to put the responsibility on me and ask me to lower the value appraised of a property because they were not willing to lend a particular dollar amount to their customer. Wrong answer! The value is what it is. If they aren’t comfortable with the borrower that is on them. But that is another discussion.

Investment value is very different from market value as it also takes profit into consideration. Ideally the comps used in any appraisal will best reflect what is happening in the market for a specific type of property with similar characteristics and amenities as the subject property. The comps used would be the best sales available to compare to that particular property on that date. An appraiser or investor will use both sales available to realtor’s and sales availble through public record that are not necessarily sold through a realtor as in properties sold by owner or may even be owner financed.

Investors (ie. you and me) have access to this same information via the public record. An appraiser will take the extra step to verify the information by talking to one of the parties to the transaction. As an investor you can do the same thing. In an investor market (and there are some markets that are set by investors) many sales are most likely not going to go through the mls. And those are not going to show ARV either they will show investor value.

Many of the investors I’ve dealt with don’t get their comps from realtor’s unless they are new to that particular area. They get their comps from knowing the area and study/tracking the activity in the area. From talking and networking with appraisers or from other investors.