Getting Appraisals

Bird Dogs, Wholesaling
1

I’m looking for feedback from other experienced Wholesale investors that do or do not pay for a professional appraisal when wholesaling a property. Its not so much as the appraisal cutting down the profit margin as the overhead this would put on the business for deals that don’t go through.

Any thoughts? My strategy would be as follows:

  1. Get the property under contract based on my numbers without having seen the property. This would be based on the initial analysis of the property’s ARV by myself, the Realtor or the seller/owner.

  2. Get appraisal to validate the estimated ARV.

  3. Inspect the property to determine the repair costs.

  4. At this point I know whether its really a deal or if I should move on. I can also present the appraisal to the prospective Investor/Buyer of the property.

Any feedback on my strategy is also welcome.

2

It would be simply throwing money away. The more deals that you try to do, the more money that you’ll lose.

If you are planning on being a wholesaler, then you need to get to know your target area VERY WELL. Someone should be able to call you on the phone with a property and upon hearing the basic description and address, you should have a good ballpark figure of the market value of that property in retail condition. If you’re not able to do that, then you need to study your market more.

As a wholesaler, if you need to further determine value, you should use comps instead of a full blown appraisal. No reason to foot the bill yourself.

A savvy buyer (or investor) would not use your appraisal to sneeze in (no offense). Even ‘honest’ appraisals can be adjusted up or down quite a lot depending on what the customer is after, so unless you get the appraisal (meaning the end buyer), it’s not really useful.

Raj

3

Raj, Your feedback is appreciated. No appraisal. I guess I’ll just have to get some assistance from my Realtor friends as other comp sources seem jaded to me (zillow for example).

4

a CMA is going to be much more accurate than zillow, yes.

However, as stated, your primary source of value should be coming from YOU. You really do need to know the values of the homes in your target area so that you can quickly formulate an estimate of value. Everything else is secondary.

Raj