I’m looking to invest in multi-family units in Houston, Texas but I don’t have the money for the appraisals, which can easily be between $2,000 to $4,000 per property. I have found a company that will actually lend me the money for the earnest money deposit but nobody that I know of wants to lend money to pay for the appraisal. I can get financing for the deals from hard money lenders but only after the MAI appraisal is done. I don’t know of anyone, private partner, hard money investor or otherwise, who will lend for the MAI appraisal because the value is unknown.
After calling several dozen appraisers, I realize that none of them are willing to roll their fees into the closing costs, which is understandable. Basically, the appraisers want to be paid up front. The sellers I talk to either don’t have the money to pay for the appraisal or simply aren’t willing to pay for it. Obviously, I’m shooting to get a no-money down deal but the appraisal issue seems to be a major roadblock.
The bank lending the money will more than likely do their own appraisal. Do they require you have one of your own first? They like to do that sometimes…demand you get an appraisal, then they order their own.
You might be able to use a BPO also, rather than an appraisal. Generally you can get a BPO for less than $100.
It depends on the bank. Some will accept it for a short sale and some will not. DMC and AM’s use BPO’s 99% of the time for their property values simply because of the price. Not to mention in the past six months the BPO’s are more accurate than the appraisals and cost a fraction of the price.
When a value for a short sale subject property comes in to high I request to know if the lender used a BPO or an actual licensed appraiser. Either way I argue that they have to order the opposite to see the ‘real’ value of the property. I encourage the lender to use what’s in my favor when I can.
Also, BPO’s are generally referred to as appraisals even though they are not technically.
I don’t think you will have much luck getting a commercial lender or a hard money lender to accept a BPO. If you cannot afford the 2K to get the appraisal done you are in for a rough road down the line especially if you are trying to purchase commercial multi-family units. I’m shocked you were able to find an HML that will loan you money with no reserves or at least 2K worth of reserves.
Look for properties with owner financing and that have upside. Refinance in a year and pull your cash out–there are programs that don’t require upfront appraisal fee on a refi, but they would do you no good on a purchase if you don’t have at least 20% down.