Understanding Real Estate Appraisers

Appraisers, Handymen and Contractors – With these contacts, you not only need to find professionals that you trust and can work with. But you also you need someone that is preferably an investor themselves but if not, at least understands investment property and the end financial result you are seeking.  A $60,000 home in a lower income neighborhood would be rehabbed differently than a $400,000 house in a higher priced neighborhood and your appraiser and rehab crew need to understand those differences.  Also your appraiser must understand the need to review the house, as if any needed repairs were complete. In other words, he need to give you an AS-IS appraisal and at the same time a solid professional guesstimate of what the ARC will be when the property has been rehabbed completely. Essentially, this means that the appraiser will go through the house and do the appraisal, as if all the repairs were done. They will then give you a number that represents what the property  will appraise for when the rehab is complete.
You may need to go through a few appraisers to find a good one who is honest. You can usually call your bank or lender you are planning on using. This is sometimes best as they have specific lists of people they can and cannot work with.

The same approach can be taken with your handymen and contractors.  Tell them you need the job done for $5000, when you know it will cost $10,000.  Make sure they are not cutting cost, just to get the job.   Some trimming is fine, but cutting the price in half, just to get the job, will end up giving someone poor work quality.

When identifying a new contractor, be difficult.  Ask for the moon.  Tell him/her that you want a rehab quote with pictures and estimates broken down room-by-room.  If they give you this, then you have someone who will work with you.

Since time is one of the biggest factors when rehabbing a house, make sure your contractor gives estimates of completion time.  Also, make sure they complete your quote quickly.  If you have a 10 day inspection, tell your contract “We are rushed, our inspection is only 24 hours, can you get this done for us right away and fax a quote to me in the morning?”  You are trying to see if they follow through on what they promise.

Also, send more than one handyman to a job, unless you’ve worked with him before.  If you have a new person, make sure they are not the only one to give you a quote.  They may be high or may do poor work.  If you send three or four people to the same house, you will have a good idea of the scope of work required to complete the house.

Last – make sure you contractor of handyman is on the same page as you.  My philosophy is that I will not rent something that I would not spend the night in.
"We want the home in a condition where you would spend 30 days living there, if something were to happen to you own residence.  We are not as concerned with the neighborhood, only the condition of the home." Notice we like to call it a "home" and not a property.  This sounds more personal.

 

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Understanding Real Estate Appraisers

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