A few years ago I bought an investment property for $11k in a nice neighborhood, so the county assessed it at $52k, even though it is not habitable yet. I have been wanting to go into business for myself for a while now and was wondering if I tried to use that house as collateral for a business loan, would i get $52k worth of cash for it? I know the bank has the property evaluated, but does the evaluation differ much from the county assessment? It is a brick house in a nice area, so from the outside it looks fine, but the inside needs MAJOR work. I'm in another state now, so can I have them just check out the outside the house and give me an appraisal that way? Any info you can give me on this would be great!
2007-01-28 00:54:44 · 4 answers · asked by Matt 4 in Business & Finance ➔ Renting & Real Estate
If I sell it like it is, I don't believe I would get much about of it. But since it is assessed at $52k, I was hoping that was around what the bank would give me for a mortgage on the property. Since I want to open a business, the more cash I can get for this property the better
2007-01-28 01:14:52 · update #1
You might find it very hard to get a mortgage at all. Lots has changed since you first got the appraisal on this house. Those days are gone, and there are stricter guidelines on appraisal underwriting nowadays.
On the appraisal, the appraiser will need to comment on the material used and condition of each home component; ie walls, floors, systems, etc. For each item, if the condition is not average or better, the item will need to be repaired and made at least average in order for the loan to close. Words like below-average, fair, poor, awful, dangerous, missing, or unsafe will stop any loan from closing.
The previous advice you were given, to sell the property, is the best.
PS - Below you are told to ask for a 2055 exterior only appraisal. Don't do that. If you ask for the exterior only, you're guaranteed to have to do the interior/exterior.
Neither the borrower nor the lender can choose what type of appraisal to do for a specific loan. If an automated system is used to underwrite the loan, it will weigh several factors to decide on the appraisal. type. The fact that you are doing a cash-out refi will put in in the interior/exterior catagory most likely. If your loan is being manually underwritten, the loan program guidelines will dictate the appraisal type, which is almost always interior/exterior.
If the exterior only is permitted, the lender can still request an interior/exterior, but not the other way around. If you ask the lender not to look inside the house, the first thing they will want is to see inside the house. Think "Don't Look Behind The Curtain, Dorothy." from the Wizard of Oz.
And if you tell them you have things to finish on the house, the appraisal will be done subject to completion, The loan will not be able to close until and unless the appraiser goes back out and certifies the work has been completed.
2007-01-28 01:23:01 · answer #1 · answered by CJKatl 4 · 0⤊ 0⤋
The county assessment has little to do with the appraised value of the property. You say the bank has the appraisal...how old is it? An appraisal is only good for a year or less. You would need a whole new one. There is such a thing as a "drive-by appraisal" where the appraiser does not go inside. Ask the bank if that is a possibility. They call it a "2055 exterior only" appraisal. Tell them you still have a few things to do to it right now so they know it isn't perfect.
2007-01-28 02:16:15 · answer #2 · answered by dreamgirl 5 · 0⤊ 1⤋
You would not be able to take out 100% of the equity in the property. Realistically only about 75% since it isn't owner occupied.
You can always try it.
Best of luck,
2007-01-28 01:18:25 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Why don't you sell the property and us the money, instead of leaving it vacant and deteriorating?
2007-01-28 01:12:59 · answer #4 · answered by Anonymous · 1⤊ 0⤋