Unlocking Real Estate Secrets: 7 Key Insights from an Appraisal Expert

Dylan Silver (00:01.266)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have Alek Petreski, certified appraiser, investor, real estate entrepreneur in New Jersey, which is my home state originally. I’m in Dallas by way of New Jersey. Alek, welcome to the show.

Alek Petreski (00:22.454)
to meet you Dylan thank you for having me

Dylan Silver (00:24.966)
It’s a pleasure to have you. And you know, I have a lot of questions. I have actually wanted selfishly to talk to an appraiser here recently because I had a strategy that I wanted to talk to an appraiser with. But I want to ask you as an appraiser out there in New Jersey, I’m imagining that most of the business and correct me if I’m wrong, a lot of the business is with, you know, single family homeowners that you’re going out and you’re doing these types of appraisals.

Alek Petreski (00:52.79)
Yes, yes, we do commercial residential land, but predominantly residential appraisals.

Dylan Silver (00:58.778)
So, I wanna get granular here and I had this question that I really wanted to ask an appraiser. I’ve seen people do, and I’ve heard of people doing appraisals for new builds before the build is done. Basically based off of the blueprints. And then maybe it has to be confirmed once, you know, it’s been built, right?

Alek Petreski (01:22.328)
Yes.

Dylan Silver (01:23.726)
Is this a good idea, do you think? I think it’s a good idea. I think, you know, if you pay the appraiser so you have an idea of what it might appraise for, based on, you know, the blueprint, that’s a good idea for anybody who’s doing a new build.

Alek Petreski (01:36.16)
No, many new developers do the same thing. I mean, I’ve been doing appraisals for developers in the years that before even they built the site, they ordered appraisal appraisals to do so they know where to go from point of view besides before even the sale arrived. So we do plenty of those appraisals. It’s very common. It’s very typical to establish value based on the specs.

Dylan Silver (01:58.823)
Now

When you have an existing build, right, you’re doing a flip of some kind, you’re doing some type of forced depreciation. And let’s say you’re not adding any square footage, but you’re doing major upgrades to, you know, the roof, the kitchen, you know, all new countertops, new sink, new flooring, new cabinets, new appliances, and then, you know, the master bathroom might have been, you know, a 50s, very outdated, 60s, very outdated, and it’s just getting a full facelift.

nice floor, you know, new tub mirrors, everything new in the kitchen and and and master bathroom. Would it make sense at that point for someone to have an appraiser come in and look at it before they do the flip and say, hey, this is the what I’m thinking about adding to it. How much more would it appraise for? Is that something that a flipper could do?

Alek Petreski (02:54.478)
That’s a very, very good question and very, very smart point you brought up because I’m getting plenty of calls by investors, even locally that be like, hey, Alec, can you take a look? I’m stuck, doesn’t move. And I’m about to be even whatever I put in and whatever I’m getting out. So a lot of people get stuck in it. Yes, it’s very important for you to understand and speculate.

Because speculation can cost you more money versus reality. And sometimes certain markets, can put in more of improvements than the market can pay out. And it doesn’t go dollar for dollar. So at the end of the day, those up.

updates, upgrades, renovations, because anybody can call updates, upgrades, renovation. You can spend $500 on vinyl floor and say I updated versus hardwood floors. So the appraiser goes in there and looks into what

this is contributed value based on the quality of materials and where does it sit in that neighborhood, that market area, how the market reacts for properties, are this type of renovations versus that type of renovations. But it’s gotta, it requires competence too, because competent appraiser.

looks at and sees there is a line between hardwood floors versus laminate floors or versus carpet and these type of tiles, that type of tiles. So sometimes it’s very important to know what are you putting in and what are you getting out of and to give a little room for that risk of the market. Because by the time you finish the project, you don’t know how the market may turn and that gap, if you just go,

Alek Petreski (04:39.84)
It just, know the numbers because Zillow says or Propstream says, I mean nothing against to those AVMs, but it has to be focused on what specifically you do in that force appreciation.

Dylan Silver (04:53.438)
100 % and I actually thought about this yesterday actually two days ago because I was talking with a builder out in Texarkana and they were telling me basically you know for new builds you could do this with the appraiser and I thought about how come the flippers I know are only doing the appraisal after the flip is being done because that’s a lot of risk Alec right and I thought about I was like hmm why don’t they do the appraisal beforehand and I thought about it well maybe they don’t have

you know, all the specs or the blueprint and maybe they are not pulling permits. Right. I think that’s kind of somewhat common out here in Texas, at least among, you know, the the the people that I’ve seen. And so when you don’t have an appraisal before starting, you are kind of, you know, hoping and praying. And that’s not exactly the best formula to have. I would like to think that if flippers, you know, put up the five hundred or a thousand dollars for the appraisal.

beforehand, that actually saves them lot of headache in the long run.

Alek Petreski (05:57.486)
Absolutely, it’s because you said why people don’t do it Well people tend to do what’s easy not what’s right and that’s where they catch themselves I mean they so because at the end of day in a good market You might get through and buy yourself or escape route, but when the market seats normal or it’s tougher Everything shows up and when everything shows up

Dylan Silver (06:09.395)
Yeah.

Alek Petreski (06:25.656)
that’s where you pay the price of whatever you missed the steps before you put it on the market. I mean, go ahead.

Dylan Silver (06:32.188)
Now, I think about appraisal process in general, I’m a newly licensed realtor here in Dallas. I got licensed in early April. And now we’re here in June at the time of filming this podcast. I think about appraisers as generally being impartial to either party. They’re there to make an analysis of the property. But if an investor, if as an investor, I hire an appraiser, it appraises for this amount, right?

Is a mortgage company going to use that appraisal or does is the mortgage company going to have their own appraiser that comes out there and maybe disputes what my appraiser says?

Alek Petreski (07:11.07)
No, mean, listen, really every mortgage company or lender is guided by their investor guidelines, basically. So they determine how they want to proceed. there is no one answer fits all. In 2008, they brought new this rule, AVMs between appraisers, which was the biggest scam out there because they allowed incompetent people collecting of the hard work of the appraisers work because at the end of the day, I’m speaking to the client.

And if I’m incompetent, not confident appraiser, and I can be manipulated, then I don’t deserve to have my license, you know? So to go back to your question, it depends on the lender how and who they want to assign or get to the work. But you always have the right to get your own appraisal. And 99.9%, I am sure, this is because I have over 30 years experience in this field, that when you order appraisers that will, you know,

they’d like to get work, they have to get done these AVMs, right? I mean, and get paid for whatever the fee they’re gonna give them. So now that appraiser, imagine it’s getting less paid. And I know this is gonna contradict a lot of stuff, but that appraiser is working on turnaround on paper. It’s not gonna be thorough, meticulous to detail. He’s not gonna look up whether the property is in the floods or not, whether there is a contamination or not.

He’s not looking into with the comp in it or maybe he’s incompetent to look into it. I don’t know, but I know there are a lot of missteps that people don’t understand what good appraisal is, what detail in total appraisal is. They do side adjustments, they’re not gonna go and look up which is very difficult to find land sales to establish value in the marketplace for how much the land sale is. So now you can do per square feet or per acre adjustment. He’s not gonna do that.

Because you know why? Because either lack of competence or it takes a lot of investment in tools and resources for you to be up in those tools to be able to get that data. And the magic is in the data, you know, the better data you have. Also, not everything sells on MLS. There are properties they move with or without realtors. So now, how do you find that data? Used to was back in the day, MLS was the king. I don’t think so anymore.

Dylan Silver (09:27.592)
Yeah, there’s a lot more creative things happening. mean, especially being an investor yourself, seller finance, know, deals subject to the existing mortgage. These deals may not show up on the MLS. And then how do you find the data? You know, then pivoting back.

Alek Petreski (09:42.222)
But let me correct you for a second, but arms length transaction is very important because all these flavors that you just mentioned, they’re very happening in the marketplace. Sometimes they tend to be not arms length transaction because sometimes you may willing to pay more for something because you’re not getting an appraisal, you’re not paying for, let’s say if you buy a house subject to, you may pay more for the house, but that doesn’t mean that’s the value of the home.

Dylan Silver (09:44.776)
Go ahead.

Alek Petreski (10:08.066)
because you’re adjusting because of the services that you’re giving them and they’re giving you vice versa, you know? So technically I would stay out of those type of properties. They are not arms length transaction. And you can see if you click and you see the deed, what’s happening with the transaction, you can understand what’s happening.

Dylan Silver (10:25.074)
Yeah, I mean, if you’re buying a home subject to versus buying a home, you know, taking out a traditional mortgage is entirely different deal, right? So you may be willing to take on a much higher price subject to than you would, you know, with a traditional mortgage. I want to pivot back here, Alec, to this idea of an appraisal prior to a flip. I’m thinking that there may even be a lot of appraisers who will not encounter this type of thing, because it’s kind of, you know, niche idea to talk about. But if as an investor, I go to an appraiser and I say, hey,

This is what I’m adding. What are the things that the appraiser’s gonna wanna see from me, whether it’s a blueprint, whether it’s maybe an actual, I’m not sure what you would call it, a demo of the materials that I’m adding to the kitchen area. What is the appraiser gonna ask me for in order to make an appraisal prior to me flipping it?

Alek Petreski (11:16.878)
Well, that’s a very good question. Put it this way. I mean, appraiser can have a conversation. If you have plans, whatever you’re trying to do, like if there is a professional company involved doing the repairs, innovation, and all that stuff, so pretty much you’re going to have a plan and specs of what you’re doing. But let’s be honest, 90 % they don’t.

Dylan Silver (11:41.362)
Right.

Alek Petreski (11:42.158)
I mean, I’m doing the business and I know I talk to a lot of people so let’s not speaking, you know being you know, cute It’s just let’s speak reality, right? So they’re not gonna do that But when you have a conversation the only person is gonna shoot himself in the foot is yourself because if you’re lying to me you’re lying to yourself because if I come in and we have a conversation Okay, what is the scope of the work that you’re doing on the property that we call it scope of work? What is going on here?

So I’m gonna run away with this and that and that. And if you please say, let’s say for example, I’m putting, know, hardwood floors, I’m putting, you know, kitchen, not home depot kitchen, I’m putting, you know, costume Italian design, I’m these kind of countertops, the bathrooms, it’s gonna be this type of material that, right. The appraisal creates, you know, a picture of.

you know, what that could, you know, on the marketplace mean, right? So now when he puts the classification at the bottom of the report, he’s going to put it subjects to plan specs and, and to be as whatever it was, you know, presented, right? And the house doesn’t meet that. And now you go for an appraisal and you have a laminate floors and you have a home depot kitchen countertop, regular stuff that it’s not, you know, high value or high quality materials. Now all of a sudden you’re to shoot yourself in the foot.

Dylan Silver (12:45.96)
and it doesn’t match.

Alek Petreski (12:58.51)
So technically it just, it’s just a matter of the more truthful you are with yourself and more communicate with the appraiser, the more you’re to know for yourself the truth. And when you know the truth, you can build strategy and plan from there. Otherwise you’re shooting yourself in the foot and you can complain as much as you want to because he says in the appraisal subject to this happening stuff. But that’s not what it is. So now in subject two,

Dylan Silver (13:23.431)
and it didn’t happen.

Alek Petreski (13:28.489)
The appraiser is basically clean and clear.

Dylan Silver (13:31.55)
Pivoting a bit here Alec, you’re an investor yourself and an appraiser. I am an aspiring investor, I’m a wholesaler and a realtor, right? And I’m curious, did you become an appraiser first and then an investor or were you an investor first then an appraiser?

Alek Petreski (13:47.15)
No, how it happened? I mean, it’s very funny story. I came in this country to play soccer professional soccer That was the dream but injury and this and that led me to You know not be able to get you know some business some income because I didn’t finish college or anything I mean because I wanted to be a soccer player right and what happened is I was watching this night show of Carlton Sheets back then in 1990s I was watching at night. I bought his course and all that stuff

And he was talking about how you need team. You need an appraiser, you need a realtor, and this and that. So what happened was I couldn’t find nobody on my team. Not because of anything. I was broke in number one. In number two, I had broken English. Today I speak better than then. But people were like, know, so like when they, I couldn’t remember right now.

Dylan Silver (14:36.766)
He

Alek Petreski (14:43.982)
picking up the phone and hearing that real data, feeling like, who is this fool on the phone? Because I was reading in the course that you gotta call a building your team. And he’s like, how much money you have down to put down payment, ask him this question. And I’m like, I’m an investor and this and that. He’s like, he probably thought, who is this fool, man? I couldn’t find nobody. And plus I wanted things, being also at least you want things like, know, fast, wanna aggressively go at it. So also I couldn’t find the appraisers who,

would be Toro, who would be on time. It would take forever to get an appraisal. So I’m like, by the time I wait, first I became a realtor actually, because I couldn’t find realtors to do the job. So I said, I need access to MLS, I need this and that. So while I’m waiting this, opening up the dictionary, and I was studying for my real estate exam. So I passed it on first time, starting with dictionary. But when I got my real estate thing, I couldn’t evaluate property.

So then I was like, what, does it appraisers? So I’m like, okay. So I got to become a priser because nobody, can’t find somebody to help me or do stuff. So that’s how I became a priser. But then in 2000, in 2000, when, you know, like when I started, cause you take, it takes five years to become apprentice to get all hours. It’s not like over 19. So around 2000, business was booming. So I got very busy making money in the real estate appraisal because at that time we had our own clients.

So was knocking on doors and mortgage companies, would give me the work. I would return them in one day. All night I would work, I would return it, you know? And that’s how the business started booming. So it took me away a little bit from investing because, you know, money talks, right? You’re working, you’re creating, you’re sending work, but it never, it’s a job. You know, it’s a job.

Dylan Silver (16:30.366)
Yeah, it’s a rat race.

Alek Petreski (16:32.653)
Yeah, if you don’t do appraisal you don’t you done, you know, you the money goes by you done So that’s why what I found I needed I needed to go back to my investor kind of you know desire and passion to create something because I mean job, know you you work it you get paid you’re not working you’re not getting paid Exactly exactly

Dylan Silver (16:53.01)
Yeah, there’s no equity. And so for me, you know, I was doing and am doing wholesale. And then I saw an opportunity. have a mentor is like, you should become a real estate agent. It’ll help accelerate your journey. And now that I’m having the same kind of experience that you’re having, I’m saying like, well, I really do need to have appraisers. I haven’t having to hire appraisers. I should really go be an appraiser. And so now I’m thinking like.

There’s a lot of people who might not even know, like if you’re on the outside, what an appraiser is, and they may think it’s the same thing as a real estate agent. It’s not, it’s not at all. And so if you’re an investor or an aspiring investor, I’m almost saying go through the appraisal thing maybe first and then maybe look at the real estate license. I don’t know.

Alek Petreski (17:40.79)
I mean, it’s good to have it, but I guarantee you it’s going to distract a lot of the purpose and what you’re doing because appraisal takes time. Appraisal is not like three comps and you know, we boom, we have a report or like, you know, realtors do a gamma realtor too. you know, how they do CMAs. Like they’re going to pick comps based on the numbers, they feed their narrative and they’re going to say, should the listing. This is what it is. But whether, I mean, there’s so much involved.

I mean so much involved to arrive at the value. I wish was that simple, you know, I wish was that simple as a CMA, but it’s not.

Dylan Silver (18:16.008)
Mm.

Alec, do want to ask you about soccer or football. Are you still following current day football, soccer?

Alek Petreski (18:27.06)
I don’t miss a game.

Dylan Silver (18:28.314)
Okay, okay, so, give me your- your top footballers dead or alive.

Alek Petreski (18:29.966)
coaching fanatic I mean

Alek Petreski (18:39.07)
will stick with Ronaldo. Cristiano Ronaldo. Because he’s full player, basically. He can use head, shooting, dribbling, speed, all the aspects. Well, I like Messi too, but I believe his speed, dribbling, that’s maybe free kicks, that’s his…

Dylan Silver (18:41.81)
Which Ronaldo? Which Ronaldo? Okay.

Alek Petreski (19:04.974)
But heading, all that, you know, full picture of a good player is missing, you know, the heading part, the presence in the box.

Dylan Silver (19:13.79)
So those are your top two, Messi and Ronaldo.

Alek Petreski (19:16.206)
Well, I mean, like everybody else, pretty much right now. Everybody else, it’s nowadays that they become player. It’s like Instagram fanatics, you know, they want to take a picture for us on Instagram, fix their hair and make sure everybody there follows sees them, that they are getting ready for the game.

Dylan Silver (19:18.344)
Okay.

Dylan Silver (19:32.338)
have to say that it’s been exciting to see the growth of, you know, football, European football, American soccer, right, in the United States, just in my own lifetime. If you’ve been, I love Fort Lauderdale, I love Miami, so of course they have Inter Miami. It’s a phenomenon. It is like completely mind-blowing just how popular that is down there. I mean, it definitely rivals everything else that’s going on down there. And because you have such an international presence, specifically down there, like…

Alek Petreski (19:47.15)
not.

Dylan Silver (20:02.546)
There’s no saying that that’s not just as big, if not bigger than anything else that’s going on down

Alek Petreski (20:08.59)
I’m excited and deserves it. It’s well deserved. mean, it’s around the world and we have in America the means to be, you know, I mean, very important player in the soccer world.

Dylan Silver (20:22.334)
Yeah, we’ll see what… I think what’s gonna happen, somewhat, you know, maybe I’m overly optimistic on this, is as we’re getting more games, as more people are seeing more matches, right? And they’re seeing the European leagues, and they’re seeing the Latin American leagues. They’re gonna start to see, from an earlier age, this kind of influence. So it’s not just gonna be people who are maybe from those different parts of the world, who are coming here and, you know, showing their kids.

It’s going to be people who just turn on the TV and then they see the games and they say, well, I want to go play. Growing up, I was a tennis player. Right. And so we would have, you know, some matches. It’s kind of I would say it’s a little bit more hit and miss with tennis because there’s no current American male champion. The last one I want to say was like Roddick in the early 2000s. And so many cases like tennis has fallen off completely like it’s been surpassed entirely by like pickleball.

Whereas I feel like soccer has had the, you know, football has had the opposite trajectory. We’ve seen now just the huge, enormous growth of the sport and I’m excited to see what happens.

Alek Petreski (21:29.004)
Yeah, well, I know it’s about real estate talk, but nothing good is going to happen in the soccer until they fix the how they go by the soccer. You know, I’m very involved in soccer coaching, training my son, a soccer player and all this stuff. He was in Europe, just came back, but nothing is going to change until they fix the youth development on the soccer and not by pretending it’s by doing and how they pretend I’m a very witness.

You have kids playing through five, seven years, all these academies. They spend all this money, they all did travel, hoping that they’re gonna be scouted and go to these places and this college is showing up, because I’ve been to so many of those showcases where colleges are supposed to show up. They meet each other, they teach each other, they barely look at anybody because guess what? Because their roster is full of 11, 12 international players. That’s wrong. That’s wrong.

Dylan Silver (22:22.248)
Mmm.

Alek Petreski (22:23.308)
Because now, because the kids are getting cheated and college soccer should be either limited to one or two international, like in Italy soccer, they have only one or two international players versus having 11-12. So now the whole roster, they’re the money for the international roster just because somebody, some kid did not make it into Sokol Academy. Now he’s gonna come over here, he’s gonna get a free ride. And I don’t think it’s that badder.

Dylan Silver (22:34.461)
Yeah.

Alek Petreski (22:52.578)
think so but just the pill coming from Europe yeah yeah yeah I mean I’ve seen it you have a 25 year old guy he’s like okay I didn’t make it anything out of my career I’m gonna go to USA this college is gonna recruit me I’m gonna stay there you know play just because I’m coming from Denmark I have I witnessed that and I’m like my god really so now and you have 11 8 10 go go check the rosters you’ll see where the problem is the problem is that

Dylan Silver (22:55.432)
The appeal. Yeah.

Dylan Silver (23:12.392)
Hmm.

Alek Petreski (23:21.536)
the system is pushing his own people and now from those people you know have to have you know obviously players that play in national teams or wherever it is.

Dylan Silver (23:31.112)
Are you seeing any people who maybe have younger families in the United States encouraging their families to go play abroad because of this reason?

Alek Petreski (23:42.862)
Yes, but it’s a very deceiving world. I mean, I did it with my son. It’s a very, very deceiving world. It sounds enticing, but the price you’re paying, you have to ask whether you’re ready. The way you live, the way before you become somebody, even Top Club invites you, they’re gonna send you to Division 4 or 3. You may go, but you have to prove yourself under their watch. That’s what happened with my son. had to go play in Division 2.

just to prove himself to come back. I know, you know, I know the lie, but it’s very, very, very tough. If you know what these, those kids go to give themselves chance, I think everybody should appreciate it. At least should be a little more. Yeah, they’re getting paid big bucks, but by the time they get there, being away from home, homesick, sleeping with five, three, four guys in their rooms.

Dylan Silver (24:13.438)
first hand.

Dylan Silver (24:22.942)
Yeah.

Alek Petreski (24:36.782)
good life conditions, being in some area that you don’t know nothing. I not that many people will go through it.

Dylan Silver (24:44.518)
It’s the love of the game, It’s the you really gotta love the game. It can’t just be about one thing. You gotta love the game. Alec, we are coming up on time here. It was a pleasure having you on. Where can folks go to get a hold of you, Alec?

Alek Petreski (24:58.904)
Well, I mean, obviously I’m a New Jersey real estate appraisal group is the group that I’m running for real estate appraisal. The website is www.NewJerseyRealEstateAppraisal.com. But I’m very capable and resourceful to communicate about appraisals in real estate, whatever it is in the country, because there is a myth that appraiser has to be next door.

the biggest meat right now because for today’s I can know more about your neighborhood and your property than somebody living and outdated down in the block. It used to be like hey do you know John and Mary they sold the house because nobody could have find anything sold. So John and Mary sold the house it was colonial so now we have to go you know use that as a comp and checking tax records. now nowadays I mean you know it’s like

it’s available you just have to know how to use that stay within boundaries and you know pretty much it’s about I like I always say doing it right you know not doing right not what’s easy you know

Dylan Silver (26:07.635)
Yeah.

The quickest way is sometimes the slowest way and the slowest way is sometimes the right way to do it. So, Alec.

Alek Petreski (26:17.738)
Not meaning slowest in the slowest, there is no way. like quick, I like fast. Speed is very crucial. I don’t mean slowest and takes forever to accomplish something, to do something. No, what I mean is detail, meticulous to detail, mean, and understanding what you do.

Dylan Silver (26:23.409)
Yeah.

Alek Petreski (26:36.654)
because sometimes when you do something, you don’t do it just to get it off your back, off your shoulders. You’re doing it because something means to somebody and you do it right, as I said at the beginning, whether you know it is right or wrong. Like when you go to a restaurant, you don’t have to know what’s good steak. If you pay money, you’re expecting that chief to cook you a good steak. He’s not gonna ask you, you know, what’s good dressing or this and that or marinated, you know, you’re paying for something good to be brought to you whether you understand or not.

Dylan Silver (27:05.278)
100%.

Alek Petreski (27:06.164)
the same thing with my line work. mean, either you do it right or you don’t.

Dylan Silver (27:10.802)
That’s a better way to say it than I said it. Alec, thank you so much for coming on the show here today.

Alek Petreski (27:15.564)
No, thank you for inviting me.