In this episode, we talked about the difference between perceived value and appraised value.
Before we buy a house to fix and flip we analyze the market to see how much we can sell it for and what updates will get us the most return for our money. In doing so we have learned that there sometimes is a BIG difference between perceived value and appraised value. You will hear about one that had an $80K+ difference!
Perceived Value is what someone who is buying the house values the house. Here is where the colors, style of floors, cabinet finish, and curb appeal make the difference.
Appraised Value is what an appraiser will value the house at. Keep in mind that this is their OPINION! But, that doesn’t stop some idiot from screwing up your deal like they did ours.
Just because a future homeowner is willing to pay $200K does not mean it will appraise for $200K. The opposite is also true, just because the house appraises for $200K doesn’t mean that someone is willing to pay $200K for what you did.
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