The appraiser calls on a Tuesday. He has tried the tenant in unit two three times: two voicemails and a card on the door. No answer. Unit one let him in without a problem. He needs interior access to all units to complete the assignment, and your closing is in nineteen days.
You call the seller, who says he sent an email. You ask if he served written notice under the lease. He has not. You look up the notice provision and it requires twenty four hours written notice, which nobody has given, and now you are nineteen days out with a tenant who has no particular reason to cooperate and a lender who cannot underwrite without an interior appraisal.
We are a Pittsburgh-based mortgage brokerage, NMLS #1840537, and we place rental and fix and flip loans for real estate investors across Pennsylvania and additional states. Access refusals are one of the most common and most preventable causes of a blown settlement date on a tenant occupied rental, and here is how they actually resolve.
Why the appraiser needs inside at all
Investors reasonably ask why a rental loan needs an interior inspection when the loan qualifies on rent rather than on income. The answer is that the ratio is only half of the underwrite. The other half is the collateral, and the lender is lending against the property.
A full interior appraisal establishes three things the exterior cannot. Condition, which drives the C rating and therefore program eligibility. Actual room count and gross living area, which frequently differ from what the tax record says. And the presence or absence of deferred maintenance and safety issues that would make the property unmarketable at the appraised value.
There are lighter alternatives. An exterior only or drive by appraisal, sometimes called a 2055, exists. So do desktop appraisals and hybrid products where a third party inspector collects data and an appraiser values remotely. Whether any of those are acceptable is a program decision, not an appraiser decision, and on investor loans they are typically permitted only at lower leverage or on specific product tiers. Do not assume you can downgrade the appraisal product to solve an access problem. Sometimes you can. Frequently the answer is a lower loan to value, which costs you real money.
The tenant is usually not being difficult on purpose
It is worth saying plainly, because the assumption goes the other way and it leads people to handle this badly. A tenant who does not answer the door for a stranger with a clipboard is behaving normally. Most access failures are not refusals at all. They are communication failures.
The common ones, in rough order of frequency:
- Nobody told the tenant. The seller assumed the agent handled it, the agent assumed the seller handled it, and the tenant got a knock with no context.
- The tenant was told, and is at work. Appraisers schedule during business hours. Tenants have jobs.
- The tenant is worried about what the sale means. An appraiser showing up reads as the first step toward a rent increase or a nonrenewal. Silence is a rational response to a threat you do not understand.
- The unit is in poor condition and the tenant is embarrassed, or has a pet or an occupant that is not on the lease. This one is quieter and it is more common than people think.
- There is a genuine dispute in progress. If the tenant is behind on rent or has a habitability complaint, cooperation is leverage and they know it. Our post on buying a rental where the tenant is behind on rent covers that scenario in full.
The reason the diagnosis matters is that the fix is completely different for each. Four of those five are solved with a phone call and a scheduling change. Only the last one is actually adversarial.
What the lease and the statute actually allow
Nearly every residential lease grants the landlord a right of entry for inspection, repair, and showing the property to prospective purchasers or lenders, conditioned on reasonable notice. The notice period is commonly twenty four hours, sometimes forty eight, and the requirement is frequently that it be written.
State law layers on top of this. Many states have a statutory notice requirement that applies regardless of what the lease says, and some restrict entry to reasonable hours. A few have essentially no statute and default entirely to the lease.
Two practical points follow. First, the seller has the right, so the seller has to exercise it. You are not the landlord yet. You cannot notice the tenant and you should not try. Second, the right is to enter after proper notice, not to force entry. If a tenant physically refuses after proper written notice, the landlord’s remedy is a legal one and it is slow. Nobody is getting a locksmith and nobody should suggest it.
The estoppel process is a useful lever here, because it puts the tenant in contact with the transaction in a structured way before the appraiser shows up. Our post on the tenant estoppel certificate explains what it is and why lenders want one. A tenant who has already signed an estoppel is a tenant who knows a sale is happening and is far more likely to answer the door.
The sequence that works
Handle it in this order and most access problems resolve inside a week.
One. Get proper written notice served, by the seller, in the form the lease requires. Email is often not sufficient under a lease that says written notice. Text may or may not be. Do it the way the document says, and keep proof.
Two. Offer a window, not a moment. A three hour window on a weekday evening or a Saturday morning gets vastly better results than a nine forty five on Wednesday. Ask the appraiser what flexibility exists. Many will accommodate if asked in advance rather than after a failed attempt.
Three. Have the seller or the property manager meet the appraiser and let him in. Under a valid notice the landlord may generally enter whether or not the tenant is home. Most tenants who were nervous about a stranger are entirely fine with the landlord present. This single step resolves the majority of these.
Four. Explain the purpose in writing, briefly. A two sentence note saying this is a refinance or purchase appraisal, your lease and your tenancy are unaffected, the appraiser will be inside for about twenty minutes and will photograph rooms, defuses most of the anxiety.
Five. Consider a modest accommodation. A fifty or one hundred dollar rent credit for scheduling cooperation is not a bribe, it is cheaper than a week of delay, and experienced landlords do it routinely.
Six. Only then escalate. If proper notice was served and entry was refused, the seller has a lease violation to address. That is a legal process with its own timeline, and it will not fit inside your contract dates. At that point the conversation is about extending the contract, not about forcing entry.
What it costs to get this wrong
Say the deal is a four unit at 268,000 dollars with rents of 850, 825, 800, and 775, which is 3,250 dollars gross. You are financing 201,000 dollars at 25 percent down. Principal and interest in the sevens on a thirty year amortization lands near 1,373 dollars, taxes 385 dollars, insurance 175 dollars. Total obligation about 1,933 dollars, so the ratio is 3,250 divided by 1,933, which is 1.68. A comfortable file.
Now the access failure. Two additional appraiser trips at 150 dollars each. A rate lock extension, which on a 201,000 dollar loan at a typical extension cost of roughly one eighth of a point runs about 251 dollars, and if you need two of them, double it. A three week delay in closing means three weeks of rent, roughly 2,250 dollars, that accrues to the seller rather than to you.
That is somewhere north of 3,000 dollars on a problem whose root cause was that nobody sent a letter. And that assumes the deal survives. If the seller has another offer and your contract expires, the cost is the deal.
Run your version in our DSCR deal calculator, then look at the extension math separately. The ratio is rarely what kills these files. The calendar is.
Handle it at contract, not at appraisal
The genuinely effective fix happens weeks before the appraiser is ordered. Put an access provision in the purchase agreement. Language obligating the seller to provide interior access to all units for appraisal and inspection within a defined number of days, with proper tenant notice served by the seller, and making a failure to do so a seller default rather than a buyer problem.
Then order the appraisal early. On tenant occupied multi unit property, the appraisal should be one of the first things ordered, not something that happens after the inspection period closes. You want the access problem to surface while you still have contingencies, not while you have twelve days.
And ask, before you write the offer, how many units are occupied and whether the seller has a working relationship with the tenants. A landlord who does not have current phone numbers for his own tenants is telling you something important about how the rest of this file is going to go. Our post on the rent schedule and the 1007 appraisal covers the other half of what the appraiser is producing on a tenant occupied property.
How we handle it
When an appraiser reports an access problem on a file we are working, we ask one question first: was written notice actually served in the form the lease requires. About half the time the honest answer is no, and that is good news, because it means the problem is procedural and fixable in forty eight hours.
If notice was served properly and access is still being refused, we get in front of it with the lender immediately rather than letting the file sit. Depending on the program there may be an alternative appraisal path at a lower loan to value, and knowing early whether that exists lets you decide whether to take less leverage or extend the contract. Both are viable. Discovering the choice on the day of your rate lock expiry is not.
The failure mode we see is silence and hope. An appraiser reports no access, everyone assumes somebody else is handling it, and ten days evaporate. Nothing about this problem improves with time. Every day you spend not serving notice is a day added to the back of the closing.
Lease entry provisions, statutory notice requirements, appraisal product eligibility, alternative valuation options, loan to value adjustments, rate lock extension costs, and loan program guidelines vary by state, lender, property, and borrower profile, and are subject to change without notice. This is general information for real estate investors, not a loan commitment, a rate quote, legal advice, or tax advice. Figures used above are illustrative.
If you have an appraisal stuck on tenant access and a closing date getting close, reach out or call 412-990-2941. Our DSCR rental loan page covers the product and what the appraisal requirements look like.
FMC Capital, NMLS #1840537. This article is general information for real estate investors and is not a loan commitment, a rate quote, or financial advice. Loan terms, pricing, and requirements vary by lender, property, and borrower, and are subject to change. Call 412-990-2941. Equal Housing Opportunity.