Need Advice with Buying Rental Prop/Agent

Need Advice with Buying Rental Prop/Agent by Bill (GA) on February 7, 2010 @12:21

Hello, I'm in the process of purchasing a multi-unit complex and am confused; we've agreed on price and have set a closing date and I've pretty much left everything up to my real estate agent (I know, I should be watching closer); so, we get the appraisal done and I don't hear anything from my real estate agent for a few days, we then meet up and my agent tells me the appraisal came in a good 60K less than our offer;
My agent then proceeds to tell me that the appraisal is wrong and shouldn't affect the deal; but, I'm thinking what the heck is going on here, shouldn't this lower appraisal work in my favor? shouldn't I re-negotiate or cancel this deal? shouldn't my agent have told me right away instead of 4 days later?
I'm thoroughly confused and new to this process; what should I do?
Any help would be greatly appreciated,
Thanks,
Bill

[ Reply ] [ Return to forum ]

Re: Need Advice with Buying Rental Prop/Agent by Anonymous on February 7, 2010 @13:42	[ Reply ]
Property investment and being a landlord is not for you. The seller and real estate agent both have their hand in your pocket up to the elbow. There is so much to this business that you do not know.

Re: Need Advice with Buying Rental Prop/Agent

Re: Need Advice with Buying Rental Prop/Agent by Anonymous on February 7, 2010 @14:44	[ Reply ]
Being it is 60K appraised less than what they are selling for, you would be nuts to buy that property. Walk away from the deal and dump your agent as well!

Re: Need Advice with Buying Rental Prop/Agent

Re: Need Advice with Buying Rental Prop/Agent by Anon on February 7, 2010 @14:51	[ Reply ]
Drop this property immediately. You should be paying 20% LESS than your appraisal comes in if you want to consider it a 'good deal'.

Re: Need Advice with Buying Rental Prop/Agent

Re: Need Advice with Buying Rental Prop/Agent by CA (HI) on February 7, 2010 @15:44

[ Reply ]

Would the lender even fund the loan if it came in so much lower?
I think you should consider offering a lower price, even a compromise. You might also consider using an appraiser who is used to valuing rentals. Is it a legal MF? Of course, since it's a multi-family, sometimes the comparables the appraiser uses don't really mean anything unless there are other multi-families in the area. The answer is usually in the numbers.

My multi-family is in an area of SF homes, so I didn't place a lot of stock in the appraisal...the appraisal did come in what I offered, but I felt it had more value because of the cash flow and the returns. How does the cash flow look? Do you have to make improvements or is it already going to generate good income? If you are going to make money on the deal as-is then maybe it's okay--but I would still use this opportunity to re-neg the price. Especially if they are making a a good chunk off the sale. Your realtor should be able to tell you what the seller paid previously, and if they are motivated to get this closed.

Re: Need Advice with Buying Rental Prop/Agent by Anonymous on February 7, 2010 @17:13

[ Reply ]

I do not know the specifics about GA but basically I am assuming you will be borrowing most of the sales price and putting a standard 20% down.

If you set pen to the deal the seller will cheerfully go through with the sale.

However, if the appraisal comes in substantially less than the sales price the bank will usually simply refuse to write a mortgage/loan for more than 80% of the appraisal value, and you have to come up with the balance for the sale.

There are reports that the appraisers were held liable in many of the boom time real estate deals, so now the are all sucking wind and MAY be lowballing appraisals. If you (or the seller) think this is the case you can ask for another independent appraisal. If it comes in substantially higher, then you can petition that the first appraisal get tossed.

Otherwise, only you can determine if your property is worth it at the inflated acquisition cost. Personally, a low appraisal affects so many things including insurance and loan values that I would advise to walk away.

Re: Need Advice with Buying Rental Prop/Agent by Anonymous on February 7, 2010 @17:17	[ Reply ]
BTW, unless you are retaining your own real estate agent and paying their fee, never forget that in almost all jurisdictions a real estate agent works for the seller and by law must keep the sellers interests above yours. So, although they may not actively try to screw you, they will not negotiate in your favor either.

Re: Need Advice with Buying Rental Prop/Agent

Re: Need Advice with Buying Rental Prop/Agent by Ultimate M-bone on February 7, 2010 @19:23

[ Reply ]

If the appraisal is accurate and $60K less than your offer, then you would be over paying for that property. Not to mention if financing, you will likely only get 70% of the appraised value for the loan. Investors are not in the market to overpay for real estate. In fact investors should know the market and property values well enough to find a bargin. If you already have a signed contract, it's not likely up for renegotiation. And the RE agent waiting 4 days to get back to you with the appraisal report is not something to be alarmed about.

I didn't catch were you are from.

Re: Need Advice with Buying Rental Prop/Agent by Ultimate M-bone on February 7, 2010 @19:24	[ Reply ]
Never mind, I see you are in GA.

Re: Need Advice with Buying Rental Prop/Agent by Anonymous on February 7, 2010 @22:52	[ Reply ]
Karma, Brothers and Sisters, Karma, let's be encouraging to all our fellow colleagues (new and old)