[jjameson922]

You are right in that a ranch style home costs more to build than a 2 story and should not have been used as a comparison. That leads me to wonder why the appraiser did that in the first place? Is there any way to question him on this? As far as the realtor getting more money the higher the seller price goes, if you do the numbers it probably only amounts to that person making approx. 2.5% of lets say the figure of $55,000. I believe that's roughly another $1250 and I have to believe most professionals would rather see their client get the right deal while they at the same time could better spend their time working on another full commission deal with another client. Somewhere here, someone will need to be trusted and you will have to be the ones to make the ultimate decision you can best live with.

[LVHopeful]

Yes, jjameson922, I understand the two-story question. I don't know why they included this into the mix. This issue alone might inevitably raise the price next go-around, and I am not as savvy on how appraisers appraise nor what their cardinal rules are in doing appraisals, but yes, a bigger footprint costs more to build.

I also agree that the realtor will not ultimately make that much more, and you would think they'd want to see us get the best situation for ourselves -- satisfied customer, more possible business with them down the road through referrals from us. Buying a home is stressful, but our outlook has been relatively positive throughout this so far. We believe the realtor is working on our behalf.

We remain "hopeful" for a fair outcome.

[LVHopeful]

http://www.publicintegrity.org/inves...les/entry/1264

This story is a little tough to read (white lettering on gray background). I just copied and re-pasted it in a mail message to myself so I'd see it as black lettering on white. Anyway, this was written this week, and describes the whole dilemma rather well. It's entitled, "The Appraisal Bubble," by Joe Eaton.

[Daddys///M3]

Originally Posted by LVHopeful

We certainly don't want to pay more than what the house is worth.

The seller/builder wants the appraiser to consider a home that was bought in December 08 relatively nearby that the appraiser had not considered in this first look. If it's true what Daddys///M3 says that an appraiser won't go back that far (and December is more than 90 days) when choosing comparables, then maybe the appraiser will stick to their guns -- at least regarding that particular comparable the seller wants them to consider. The other thing the seller brought up was that the appraiser used a two-story home with same square footage for comparison, rather than a more matching one-story home with the same square footage.

I'm not sure what the technicalities are regarding second-opinion, second appraisals. We also don't want to lose our earnest money, certainly. How many times can the seller/builder ask for another review?

We're waiting to hear from our realtor what their reaction is to all of this. Of course, the higher the price of the home, the more money they stand to get, too. It's going to be interesting to see what advice we're given.

Thanks for all of yours.

Trust me, it's true. The appraiser will absolutely use a property that is less than a match, and make the appropriate adjustments. There isn't a lender around that will allow a comp over 90 days old to be used, and even if the appraiser did "push" the value the lender (unless it's the builder's lender) will absolutely slash the appraisal upon desk or field review. A 2 story sold within the last 90 days, with the proper price adjustments, will always give a more solid idea of current value than a single story with similar square footage that sold almost 5 months ago. I would side with the appraiser on this. To look at it from another angle, let's say that the builder somehow makes it work. Would you feel comfortable knowing that at least one appraisal professional thought that the home you purchased was worth $55,000 less than you paid for it? Especially considering that there is a good chance the value will continue to decline, and in fact may be accelerated by said builder slashing prices on the units that won't move?

If you don't mind me asking, what type of financing are you going with? I know that VA and I'm pretty sure that FHA have addendums that must be signed that state that if the appraised opinion of value comes in lower than the sales price that they buyer has the option to cancel the contract without penalty or come in with the difference.

[Daddys///M3]

Originally Posted by jjameson922

You are right in that a ranch style home costs more to build than a 2 story and should not have been used as a comparison. That leads me to wonder why the appraiser did that in the first place? Is there any way to question him on this? As far as the realtor getting more money the higher the seller price goes, if you do the numbers it probably only amounts to that person making approx. 2.5% of lets say the figure of $55,000. I believe that's roughly another $1250 and I have to believe most professionals would rather see their client get the right deal while they at the same time could better spend their time working on another full commission deal with another client. Somewhere here, someone will need to be trusted and you will have to be the ones to make the ultimate decision you can best live with.

It is very likely that there were not enough single story comparables within a 1 mile radius sold within the last 90 days to complete the assignment. In that case the appraiser would absolutely have to use the 2 story comp. Keep in mind that appraisers do have the ability to make price adjustments based on upgrades and whatnot, so it is very realistic to take a 2 story and use it as a comp for a single story with the proper adjustments.

[LVHopeful]

Well, that's the rub. It is the builder's lender we were attempting to use, the other aspect of that being they paid a good percentage of the closing costs. Hopefully not all bets are off because of this choice.

If it's apparent that the practices are questionable because they are sleeping in the same bed together, and the price changes considerably with this next appraisal review -- AND, the appraiser decides to include the older comp from Dec 08, and ditch the two-story comparable for something else, well, we may have to call them on it all.

There is a very strong possibility that there wasn't enough single story comparables within a 1 mile radius sold in the last 90 days. If that's the general guidelines for making the assessment then it's quite likely they chose the two-story for that reason. As for upgrades, how much of that do they include in their review? In other words, how deeply do they investigate their comparables to know if they're really just that? For instance, if one house has Corian and another granite, is that used?

Even with this new appraisal, maybe it would be better for us to get our own independent appraiser to do ANOTHER one and see how it all shakes out. Of course, we'd have to pick up the costs of that appraisal, too, but it might be worth it.

Again, I'm hoping our realtor goes to bat for us here and lets us know our options. There's still got to be room for more negotiation. Or, we can walk away.

[Daddys///M3]

Originally Posted by LVHopeful

Well, that's the rub. It is the builder's lender we were attempting to use, the other aspect of that being they paid a good percentage of the closing costs. Hopefully not all bets are off because of this choice.

If it's apparent that the practices are questionable because they are sleeping in the same bed together, and the price changes considerably with this next appraisal review -- AND, the appraiser decides to include the older comp from Dec 08, and ditch the two-story comparable for something else, well, we may have to call them on it all.

There is a very strong possibility that there wasn't enough single story comparables within a 1 mile radius sold in the last 90 days. If that's the general guidelines for making the assessment then it's quite likely they chose the two-story for that reason. As for upgrades, how much of that do they include in their review? In other words, how deeply do they investigate their comparables to know if they're really just that? For instance, if one house has Corian and another granite, is that used?

Even with this new appraisal, maybe it would be better for us to get our own independent appraiser to do ANOTHER one and see how it all shakes out. Of course, we'd have to pick up the costs of that appraisal, too, but it might be worth it.

Again, I'm hoping our realtor goes to bat for us here and lets us know our options. There's still got to be room for more negotiation. Or, we can walk away.

Corian vs. granite may not hold a significant amount of weight, not as much as say pool vs. no pool, but again any appraiser worth their salt will take it into consideration.

I certainly wouldn't advise against an independent appraiser. The last thing you want to do is over pay in this market. Good luck and I hope it works out.

FYI, bank owned homes and short sales are seeing closing costs covered as well, many times completely. What you won't see with one of these vs. a new construction deal is the upgrade incentives that many builders include.

[LVHopeful]

I suppose if the information about the "guts" of a place is available to an appraiser then they would use it. But you'd think the info would have to be (or they'd try to make it) balanced, where they'd have the same type of input from all homes used in the comparison. Where and how do they get this info -- from different sources? Of course, the home in question is open and available for on-site view, but the others are not. For those others they'd have to pull that information from previously filed input, I imagine. Would they get it from old MLS information they still have access to? I've looked at county records before and they don't include this extensive information. I'm wondering what resources they use.

I know in this market it must seem crazy to some that we'd want to go for a new-build over a previously-owned. We did check the REOs initially, but we also understand some of these can take months and months to close. Plus, in many cases (not all) there's that sadness of spirit lingering there. I'm not sure we'd want to start out on that note. We also are at a point in life where we wanted our own never-been-used, you know? We've had plenty of older homes in our life already.

Thanks for the good wishes.

[Daddys///M3]

Info on recently sold homes is available through the MLS. Appraisers have access to this as well as numerous other sources of information. As I mentioned before, corian vs. granite probably won't hold much weight but if a kitchen was completely remodeled (on the subject property anyway) then it will be taken into account via adjustments.

I actually can understand wanting a new home vs. a resale. I personally would not go that route unless I was to build myself, but that is personal preference. That being said, I do base that preference on experiences friends have had buying new as opposed to resale, but I'm sure that their experience is not everyone's.

[olecapt]

Originally Posted by LVHopeful

I suppose if the information about the "guts" of a place is available to an appraiser then they would use it. But you'd think the info would have to be (or they'd try to make it) balanced, where they'd have the same type of input from all homes used in the comparison. Where and how do they get this info -- from different sources? Of course, the home in question is open and available for on-site view, but the others are not. For those others they'd have to pull that information from previously filed input, I imagine. Would they get it from old MLS information they still have access to? I've looked at county records before and they don't include this extensive information. I'm wondering what resources they use.

I know in this market it must seem crazy to some that we'd want to go for a new-build over a previously-owned. We did check the REOs initially, but we also understand some of these can take months and months to close. Plus, in many cases (not all) there's that sadness of spirit lingering there. I'm not sure we'd want to start out on that note. We also are at a point in life where we wanted our own never-been-used, you know? We've had plenty of older homes in our life already.

Thanks for the good wishes.

All the Spirits are talking to you....walk time.

This is probably the worst time imaginable to decide to buy new. And unless the bill is close to a million 55K cannot be reconciled.

You can buy a regular house or a REO in a week or so. If your agent can't get a new one.

This is not a reconcilable problem. Move on.

If it is a million or so ignore all the above and do what you want.