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sunshinesmil…, Home Buyer in San Bruno, CA

Hello, I am trying to buy a condo in San Mateo and looking at a flip over property. The bank wanted me to pay for two appraisals since it's a

Asked by sunshinesmileforever05, San Bruno, CA Wed Jan 2, 2013

flip ove Hello,
I am trying to buy a condo in San Mateo, CA and looking at a flip over property. The bank wanted me to pay for two appraisals since it's a flip over one. Is this request reasonable? The seller will pay for some of the closing costs and I still have to pay some too. Any thoughts?

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sunshinesmileforever05’s answer
Hello,

I am not going to flip it. The condo which I like is a flip property. Someone bought it in Nov of 2012 and selling now. For me it will be a main residence. I am trying to save as much money on closing costs and appraisals as I can.
0 votes Thank Flag Link Thu Jan 3, 2013
Some buyers are very busy and do not have the time to make needed improvements on property, so to by a home that is being flipped is convenient and of course the price will be higher because all the work has been done (usually) since you want to save money I recommend looking at property that need a little work and elbow grease. Also, pay close attention to the homeowners association fees; often one can purchase a cute little home without having to have that extra monthly fee all the time (and the fees never go down , they only go up) Single family homes have a higher appreciation rate too. Having said that, sometimes a condo is more convenient, less expensive and offers amenities that a single family home cannot offer.
Being asked to pay for two appraisals is a strange request.
I hope this has been helpful.
Flag Fri Oct 25, 2013
The bank wants to verify the value. It is possible if the seller gives you a list of improvements or better yet, invoices of the improvements the bank may waive the second appraisal. They need to substantiate the difference in value. Another thought would be a desk top appraisal. If all else fails pay for the second appraisal. Don't let a few hundred dollars kill the deal. Possibly your loan agent can cover it.
good luck
0 votes Thank Flag Link Wed Dec 4, 2013
This is a great common question. I represented buyers on a flipped property and Buyer picked Wells Fargo and Used Three Appraisals and came up with Three Wildly Different Appraisal Values One $20,000 Off, Another $50,000 Off and $80,000 Off the Sale Price. The Buyer had to pay for two appraisal costs and the lender covered cost of the third appraisal.

Buyer end up having the home sold to them cheaper by just $20K. They buyer had to uphold their original promise on the contract to fork out the additional $20K to close the deal for the shortage. Luckily the deal closed well Buyers Happy.
0 votes Thank Flag Link Sat Nov 16, 2013
Well, after reading the responses from my colleagues regarding paying for 2 appraisal fees, I stand corrected. It is not a strange request.
Learn something new all the time especially from some great agents. Thank You!
0 votes Thank Flag Link Fri Oct 25, 2013
I wonder about the soundness of your “flip” strategy. It appears that you are paying full market value for the condo. In order to flip it and make a decent profit you will have to sell it for an amount that will repay you for your purchase price, closing costs, selling costs, and provide a profit. Why do you expect that the value of the condo will rise quickly to a level that will allow you to do that?
0 votes Thank Flag Link Thu Jan 3, 2013
My bad!
Flag Sat Nov 16, 2013
I'm with Skip, I have had lenders ask for receipts too. There are usually two reasons the lender will ask for two appraisals, one is because it's less than 90 days, the other is when you have less then 20% down.

Best,

Tap
http://www.DavidTapper.com
http://www.TeamTapper.com
0 votes Thank Flag Link Thu Jan 3, 2013
This is a very normal request for flipped properties. The problem for the lender is the best comparable sale is the property itself which sold at a lesser amount just recently. So if it was only worth 'x' 90 days ago how can it be worth 'y' today. When the price increase is over 20%, I have had lenders ask for receipts of the work done to justifiy the new price in addition to 2appraisals.
Good luck,
0 votes Thank Flag Link Wed Jan 2, 2013
Thanks a lot, Chanh! I'll get the first inspection results tomorrow and should know more. Similar place was sold in Nov of 2012 for 186K and this one is $195K. I like it but just concerned about paying for two appraisals and a home inspection.
0 votes Thank Flag Link Wed Jan 2, 2013
Happy New Year 2013!!!

Yes...if a property is flipped in such a short time such as 60-90 Days, from the Bank's perspective..they need to take two snapshots with appraisal values before lending. If you really like the condo..measure risk and reward analysis. How much are most condos selling for? If both appraisal values show a low value..or you spent money on the first appraisal value comes in low..how low is it....the Buyers' Agent should advocate your case for a price reduction or shared cost of the appraisal difference...can you afford to pay the difference in appraisal value if the money amount is not too great. Good Luck.

SF Bay Area Realtor Expert at Prudential CA Realty Sunset Office
Cell: 415-713-1244 & Email: chanh98homes@yahoo.com
0 votes Thank Flag Link Wed Jan 2, 2013
Thank you, all! Such fast responses!

Vicki is correct. It's an investment property and I am buying it as a primary residence. I was just wondering if I have to pay those two inspections or if there is a way my lender can pay. The lender said I have to pay for both plus some of the closing costs. The lender is giving me 3.75% for 30 years fixed with 20% downpayment. Do you think I can get a better rate somewhere else?

Thanks, again!
0 votes Thank Flag Link Wed Jan 2, 2013
I don't know all the details, but I think I understand your question. The requirement of two appraisals is now the law. You don't have a choice but to pay for them if you want them to loan you the money.

Good luck with your purchase!

Vicki
0 votes Thank Flag Link Wed Jan 2, 2013
I have seen this request/requirement before and I have also seen where the ender is willing to pay for the second appraisal (it would be worth asking)
0 votes Thank Flag Link Wed Jan 2, 2013
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