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ABOUT:
--Not using a buyer's agent (should have, but found out about them after we signed)
--No RE Lawyer yet
--We are using the builder's lender for a 12.5k options discount
--Base price was 335K w/ about 80K options (we gave 10,000 earnest money when signing and another 30,000 because builder required anything over 40,000 options to be paid for)
We're closing next Wednesday and had a purchase contract with the builder at 412K, house appraised for 413K from the lender's own appraiser. There is a similar house built in 2009 with almost the same upgrades as us that is currently selling for 295K that the appraiser did not compare to (our house has walkout basement and his does not). He compared 2 homes in subdivision (no walkout basement) and 4 homes in other parts of the city.
What are our options here? Can we have our own appraisal done? Can we hire a RE Lawyer/Attorney to negotiate for us and have another appraisal run or is that something only buyer's agents do?
The lender's appraiser by law must not be directly associated with the lender and under their influence. Usually they are selected by another independent company that coordinates appraisals for lenders. So it is unlikely that the appraiser was biased to provide a particular valuation.
You can try to appeal the appraisal with the lender if you think you can show it was not done correctly, perhaps by paying for a review with another appraiser. However, the lender will not use your appraisal in place of the original appraisal. Even though the other homes he used had no walkout basement like yours, there should have been a price adjustment in the appraisal report to account for the difference. He also can only use homes that have recently sold. Homes currently for sale do not count.
If you thought it was overvalued, why did you agree to the builder's price in the first place? Or did you not see the other house until later?
Yeah I didn't see the other houses until later (recently listed about 3 months ago during construction of my house) ... I also should have used a buyer's agent so they could have negotiated the price before the contract ... I didn't know the base prices were negotiable since they were giving a 12.5K discount on options, I just went with it. Dumb mistake I know.
...I didn't know the base prices were negotiable since they were giving a 12.5K discount on options, I just went with it. Dumb mistake I know.
Base prices are difficult to negotiate with builders. They are more flexible on spec homes (already under construction), or as they get to the end of building out their subdivision. They usually will only want to negotiate on options/upgrades.
Quite direct, I know - but you are going thru a serious last minute bout of buyer's remorse. You are paying a premium for new, for having it your way, for untouched carpets and walls, never before used toilets. Warranty and all. It appears there were better comps that a 3 year old home without a walkout basement. rjrcm is right, getting a "fixed" appraisal isn't easy to pull off in today's environment. But if you are really concerned value is not there......1) pay another professional to review the report, then 2) order an appraisal on your own, delay your closing until your new report is in. If your loss is truly more than 10K, walk away.
If your findings do show there was a blatant reach for value, you could come out with your earnest money.....but that's a longshot. I suspect the value of the home you are buying can be supported. If anything, the reports have been coming in on the low side, not the high side. Over 80% of the loans I do are new construction. You will rarely get dollar for dollar of the options and upgrades, unless they are for additional square footage.
Edited to add: by all means consult an attorney, but without hard-core proof, chances are they'll listen politely, maybe even make a phone call or two, but remember, lawyers are about contracts, what were the builder's missteps, not about what's not fair with the sale.
Last edited by SmartMoney; 05-16-2012 at 09:07 PM..
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