Should a cash buyer get an appraisal? Episode #294
Todd: Hello. Welcome to Todd Miller TV joined here today with Mark Gonzales. Mark is the local appraiser. He’s got his own company, Signature Appraisals. Mark, thanks for coming on.
Mark: Thank you.
Todd: OK. So, here’s the question I get a lot. We’re working with a buyer. The buyer is paying cash. They want to do an appraisal. Is that something you’ve heard of or have you done appraisals for people that were paying cash?
Mark: Absolutely. It’s a great idea because you want to verify what you’re paying for. You don’t want to overpay for your property. And so, I’ve seen it a few times. I’ve done appraisals for people that are buying – paying cash. And it’s saved them tens of thousands of dollars. So it’s a great idea.
Todd: OK. So, you think – so how has that worked in the past? You said they saved money. So they were – agreed to at this price but for some reason, your appraisal came in at a different price?
Mark: Absolutely, yes. And it – what happens is because the market is always changing, and at one point, they’re looking at sales in the area that may have been at a higher price point.
Mark: But then, current sales have gone down, maybe the market was declining at that time and maybe it’s just that subdivision or just that area. And so, by the end of the appraisal, they realized that the contract was written too high. So, they’ve rewritten the contract and it saved the buyer a lot of money.
Todd: OK. How do they find you? Like what typically happens is, if someone is getting a loan, the vendor has a list of appraisers. They call one, right?
Todd: How is it like that people just find you? Because a buyer is like maybe they asked their agent? I mean how do typically – people typically find you to hire you to do an appraisal for them?
Mark: Usually it’s through realtors that maybe know me or loan officers. I can also be reached on my cell phone seven days a week, 702-278-8840 is my number.
Mark: So they can reach me at any time. But it’s usually referrals.
Todd: OK. Good. So, here’s a little scenario. Let’s say that a buyer get you do an appraisal for a buyer on a cash purchase.
Todd: Then they hand that to the seller and go, “Hey, we want to amend the price based on the appraisal.” If a seller calls you back and says, “Hey, there’s this other sales that I was looking at.” And they like send them to you, can you do a revision or have you ever done that where you’ve maybe a month passed since your appraisal and have you ever done like a revision? And if you do, how does that work?
Mark: Yes. Usually, they’ll contact the mortgage company who will in turn contact the appraisal management company.
Mark: And then in turn then contact me. They’ll send over a request. Usually, they’ll have some sales that occur that they wanted me to take a look at.
Mark: And so, at that point, we’ll take a look and then we’ll see if they are valid sales and if they could have been used.
Todd: OK. So – all right. So, do you get paid for that is that just part of the initial appraisal fee?
Mark: That’s just part of the whole initial fee.
Todd: What if the buyer disputes that? What if the buyer says, “Hey, I think it’s worth more. Your – the low appraisal is affecting me.” Can the buyer dispute it?
Mark: Anybody can dispute it.
Todd: Well, what percentage of them get disputed?
Mark: It’s very rare that they get disputed. Maybe one out of a hundred gets disputed.
Todd: OK. So pretty much whatever it is, it is.
Mark: Pretty much. I’ve had a couple of – on one occasion, that’s happened in the past year that there was an actual sale within the subdivision that closed. I have used it on my appraisal as a pending but it had actually sold and because in the pending, it was listed for less. When it sold, it sold at $10,000 more than it was pending for. And it happened to close on the day of the inspection. So the effective date of the appraisal which by the time it recorded, I didn’t see that sale. They haven’t recorded by the time I had finished my appraisal. And so, they asked for me to take a look at that. I did. And I amended my opinion of value.
Todd: OK. Cool.
Mark: And they came in higher.
Todd: So there is a sort of dispute for whatever process. If somebody says, “Hey, I want you to relook at this,” they can.
Mark: Yes, absolutely.
Todd: When was either the last time or how often do you think or what percentage of times do you do appraisals where there’s not a loan involved? You’re just doing it because somebody is asking for it just for whatever reason. That they want to know what their portfolio was worth or whatever.
Mark: That’s about 5 percent of my work is to just – people just calling me because they just want to know what the value of their house is, maybe they’re selling it or thinking of refinancing. And so, they just – I just had one not that long ago that was going to sell his house to his friend. And he’s going to move out of state. And they wanted to know what the value is.
Todd: So, a private sale.
Todd: OK. Cool. If somebody wants to get a hold of you and hire you to do an appraisal for them here in Las Vegas or Henderson or wherever in the Vegas area, tell them again how to get in touch with you.
Mark: I can be reached at 702-278-8840 and you can reach me seven days a week.
Todd: Awesome. Thanks. That was super informative. Anyway, I wanted to share Mark and his expertise with you. That’s my update for today and hope to see you on another video. Thanks.