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Old 04-15-2014, 11:06 AM
 
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Reviving this old thread..

Anyone had any issues with low appraisal with a new built? Appreciate any input/advice. Thanks in advance.
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Old 04-15-2014, 11:20 AM
 
Location: DFW - Coppell / Las Colinas
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Quote:
Originally Posted by loveplano View Post
Anyone had any issues with low appraisal with a new built? Appreciate any input/advice. Thanks in advance.
A new build should not be a problem. The Builder usually provides sales information to the appraiser.

Are you using the Builders lender ?
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Old 04-15-2014, 02:37 PM
 
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Quote:
Originally Posted by HFamily View Post
Qualifying isn't the issue, we're already credit approved. The issue is that the underwriters won't issue the loan if the contracted price is more than the appraised value, and the appraisals aren't taking market competition into account. With some lenders this is the rule, regardless of whether or not you're paying cash for the difference.

Something similar happened to us in 2010 during a quite different housing market. The appraisal was very conservative, the final negotiated price was less than 0.7% different from the appraisal. Our lender had a problem with that. In the end we paid a bit more cash to cover the difference and signed a letter to the lender acknowledging the fact of paying slightly more.
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Old 04-15-2014, 02:51 PM
 
112 posts, read 192,314 times
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Quote:
Originally Posted by Rakin View Post
A new build should not be a problem. The Builder usually provides sales information to the appraiser.

Are you using the Builders lender ?
No Rakin. That is the problem. We went with the same lender we are currently with.
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Old 04-15-2014, 03:25 PM
 
Location: DFW - Coppell / Las Colinas
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Quote:
Originally Posted by loveplano View Post
No Rakin. That is the problem. We went with the same lender we are currently with.
Most builders will have Comps they can provide to the Appraiser. Hopefully you did not load up on upgrades which can be a problem.

Appraiser needs to contact the builder since Builders do not put all their sales into the MLS system.
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Old 04-15-2014, 07:07 PM
 
Location: Port Charlotte
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Ok. First, a build-job, that is, you go to Bob Builder and sign a contract for a home to be built to your specs, these are not 'arms-length transactions'. Rather this would be the combination of lot, construction cost and builder profit. These transactions are specifically excluded as a comparable per GSE (Fannie/Freddie) regulations. A home constructed by Bob Builder, completed or virtually complete, offered in MLS, and sells openly with verifiable terms is an acceptable sale.

Also you have to consider that a 1-3 year home in a subdivision that has an active builder will sell 8-10% less than the same home new due to hidden builder concessions, market demands.

Finally, if you enter into a new build contract, all those extras (plug charges, etc) may not equate to value. Remember that Cost does not equal Value.
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Old 04-15-2014, 11:36 PM
 
Location: Dallas/Fort Worth, Texas
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Over 90% of the builders I'm dealing with have a new addendum or a paragraph burried in the contract that states that "if the home doesn't appraise because of price, you have to come up with the difference" usually anything that is above the base price.

I recently sold a home to a couple and they decided to put 120K in upgrades in a home with a base of 470K. Despite my objections and recommendations to them, they went ahead and did it (he so wanted to please his wife). Of course, the home appraised for 540K so they had to pay the 50K difference on top of their original downpayment. They overbuilt for the neighborhood. I hope they enjoy their home for a very long time...

Naima
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Old 04-16-2014, 07:32 AM
 
Location: DFW - Coppell / Las Colinas
29,920 posts, read 34,517,946 times
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Quote:
Originally Posted by nsumner View Post
I recently sold a home to a couple and they decided to put 120K in upgrades in a home with a base of 470K. Despite my objections and recommendations to them, they went ahead and did it (he so wanted to please his wife). Of course, the home appraised for 540K so they had to pay the 50K difference on top of their original downpayment. They overbuilt for the neighborhood. I hope they enjoy their home for a very long time...
Yep... and when a home like this sales hopefully it goes into the MLS to provide a good Comp for other sales.
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Old 04-16-2014, 09:08 AM
 
112 posts, read 192,314 times
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Quote:
Originally Posted by Rakin View Post
Yep... and when a home like this sales hopefully it goes into the MLS to provide a good Comp for other sales.
Thanks for all responses.We didn't do much in upgrades but paid 12 grand for bigger lot.
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Old 04-21-2014, 11:41 AM
 
112 posts, read 192,314 times
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The appraisal came in 3% higher than what we paid. Not sure if this is good or bad ??
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