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Old 09-02-2009, 08:37 AM
 
54 posts, read 190,200 times
Reputation: 34

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I need some advice. We just had a house built with an agreed upon price based on our upgrades and the incentives offered by both the government and the builder. We put our heart and souls into the house, the builder let us get creative with flooring and different characteristics of the home. Five months later, the house is finally done. They sent appraisers out a few weeks before the house was done, and evidently the house was appraised for quite a bit of money less than what the purchase price is. Meaning we are now going to have to fork over a relatively large amount (considering that we did everything we could to make it to where we would not have to put anything down, except for what we wanted to lower the monthly bill).

This just doesn't seem right, but this is our first time to buy/build a home. Our gut tells us that this isn't right, and of course we were never warned of this, nor did we ever see that this may happen in any of the research we did before buying/building.

Is there anything we can do?

The other crappy thing is that we had to tell our apartment we were leaving, and kept pushing back the date, so we ended up having to pay a month in the "month to month" price. And now we are going to potentially move to some other apartment complex, paying all those necessary fees, because they have already leased our apartment up to someone else.

In case it matters, the house is in Saginaw.
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Old 09-02-2009, 10:06 AM
 
Location: Dallas-Ft. Worth
108 posts, read 438,934 times
Reputation: 27
Quote:
Originally Posted by AmberMarie View Post
I need some advice. We just had a house built with an agreed upon price based on our upgrades and the incentives offered by both the government and the builder. We put our heart and souls into the house, the builder let us get creative with flooring and different characteristics of the home. Five months later, the house is finally done. They sent appraisers out a few weeks before the house was done, and evidently the house was appraised for quite a bit of money less than what the purchase price is. Meaning we are now going to have to fork over a relatively large amount (considering that we did everything we could to make it to where we would not have to put anything down, except for what we wanted to lower the monthly bill).

This just doesn't seem right, but this is our first time to buy/build a home. Our gut tells us that this isn't right, and of course we were never warned of this, nor did we ever see that this may happen in any of the research we did before buying/building.

Is there anything we can do?

The other crappy thing is that we had to tell our apartment we were leaving, and kept pushing back the date, so we ended up having to pay a month in the "month to month" price. And now we are going to potentially move to some other apartment complex, paying all those necessary fees, because they have already leased our apartment up to someone else.

In case it matters, the house is in Saginaw.

Are you working with a Realtor?? It sounds like you put a lot of upgrades into your new home and that is why it appraised lower than the purchase price. I wouldn't have advised you to put so many upgrades into the house due to it not appraising for the purchase price. Getting upgrades through the builder actually costs more. They charge a higher price so that they can make a profit. It would of been less expensive to get the standard feature and than hired someone to do the work after you closed on the home.

How much are you & your husband going to have to come out-of-pocket?
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Old 09-02-2009, 02:07 PM
 
54 posts, read 190,200 times
Reputation: 34
Upgrades, we didn't go crazy. Floors upgraded the living room and walkway, kitchen cabinets, front porch added (for cheap), . We didn't do what a lot of people did which were the faucets, garage door opener, chandeliers, garage lights, jacuzzi garden tub, blinds.... we did a few upgrades but didn't go crazy.

We are going to have to pay 5,000.
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Old 09-02-2009, 05:10 PM
 
Location: Dallas-Ft. Worth
108 posts, read 438,934 times
Reputation: 27
If you didn't go crazy on upgrades, than the builder has slightly overpriced the base prices of the homes. Which builder do you choose to build with?
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Old 09-02-2009, 06:15 PM
 
32,546 posts, read 51,084,504 times
Reputation: 18424
a realtor would have probably made sure there was a clause in your purchase contract that said the house price was based on it meeting appraised value...
if you only had a sales person with the builder as your realtor/agent helping you buy the house then of course that phrase would not have been in the contract since the builder does not care if it meets appraisal if you agree to pay what he says it is worth
he overprice all the extras he put in the house for you----appraisers base their valuations on other homes in the area that are similar--in reality appraisers don't valuate aspects of a home's design at what market price is...
if your builder set a price of 5K for your wood floor upgrade--you did not automatically see that uptick in the appraiser's valuation probably
you should have a copy of the appraisers notes--there should be some specifics about the houses used to value your house against like sq ft, room count, lot size, and other variables
appraisals are usually done with three valuation systems as well and one of those is the rebuild analysis
what it would cost to rebuild that house in today's $$

you don't say how much under your sales price that appraisal was
you will lose your earnest money probably as well as the problem of finding another house to move in
but I but you will be hard pressed to find a mortgage company to lend the amount needed to meet the sales price and frankly in this market if you overpay for a house today, you are never going to see that money come back probably
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Old 09-02-2009, 08:30 PM
 
Location: Bella Vista, Ark
77,813 posts, read 91,495,968 times
Reputation: 48822
Quote:
Originally Posted by AmberMarie View Post
I need some advice. We just had a house built with an agreed upon price based on our upgrades and the incentives offered by both the government and the builder. We put our heart and souls into the house, the builder let us get creative with flooring and different characteristics of the home. Five months later, the house is finally done. They sent appraisers out a few weeks before the house was done, and evidently the house was appraised for quite a bit of money less than what the purchase price is. Meaning we are now going to have to fork over a relatively large amount (considering that we did everything we could to make it to where we would not have to put anything down, except for what we wanted to lower the monthly bill).

This just doesn't seem right, but this is our first time to buy/build a home. Our gut tells us that this isn't right, and of course we were never warned of this, nor did we ever see that this may happen in any of the research we did before buying/building.

Is there anything we can do?

The other crappy thing is that we had to tell our apartment we were leaving, and kept pushing back the date, so we ended up having to pay a month in the "month to month" price. And now we are going to potentially move to some other apartment complex, paying all those necessary fees, because they have already leased our apartment up to someone else.

In case it matters, the house is in Saginaw.
I am confused, you say, apparently it was appraised at less, you should have been told by the lender exactly the appraisal price. Then you are given an option of accepting the property or rejecting it. Looking at the upgrades, it may not sound to you like you went crazy but upgrading floors and cabinets can really run up the price. I don't know that anyone can help you at this point, you will either have to give up the ernest money deposit and hope the builder doesn't take any action or come up with the difference.

Nita
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Old 09-03-2009, 11:42 AM
 
Location: TX
3,033 posts, read 11,028,507 times
Reputation: 1374
so, im confussed as well did you NOT have a realtor to advise you about too many upgrades and cutoms etc...

seems like adding all those "upgrades' and "getting "creative" etc you overpriced yourself out of the neighborhood.
Its not the builders fault that you choose to go above and beyond the builder standards. They are going to keep putting all the "upgrades" you want. (thats where they make thier big money)

Your house is being apprased against the rest of your neighborhood and if the majority of those homes are "builder standard" etc... The appraser puts in the price for what the house can sell for so, if the bank has to take possesion they can (hopefully) get thier money back.

Most realtors will tell you you DO not want the Most expensive house in the neighborhood.
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Old 09-04-2009, 09:23 AM
 
32,546 posts, read 51,084,504 times
Reputation: 18424
I think the OP was a buyer who used the sales agent--not a real estate agent
if so--the sales agent's commission is larger for every add-on/upgrade the owners purchase
most of those always are more expensive than having the work done by just a regular firm--like adding insulation--you could probably get that cheaper through an HVAC company or insulation company that would give a competitive bid
once you sign the contract the builder is not interested in being competitive--
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Old 09-04-2009, 12:11 PM
 
Location: Dallas/Ft. Worth, TX
2,307 posts, read 6,781,637 times
Reputation: 3907
Coulda, shoulda, woulda, what has happened has happened and what AmberMarie is looking for are possible solutions.

First off if you really love the home it is worth trying to go the extra mile to keep it. Just $5000 is not that much money for anyone to lose the deal over. Have you:

1. Obtained a copy of the appraisal and attempted to find out why they appraised it at such a small amount lower? Is it possible that they missed something? Have you spoken with another appraisal company for a possible second appraisal?

2. Have you spoken to the builder about the potential for at least a discount off of the $5000 like maybe a 50% split? If the builder refuses to help you and tries to keep your earnest money as well as chase you for more that would be totally ignorant! It will cost him a lot more to pursue it than it would be to help you and bite a little of the cost. After all if the house is appraising for more than it is worth then he is either going to have to give the next buyer a concession or find a buyer willing to put in an extra $5000 grand out of their pocket.

3. Have you considered obtaining a personal loan for the $5000 to make up the difference? If you do then speak with your mortgage professional first to see if that will affect your mortgage loan.

4. Are your vehicles paid off? There are/were loans that at one point you could obtain against them that could make up the difference. Again make sure you speak with the mortgage person to see how this would affect it.

5. Do you have a 401K, IRA or other investment you could borrow against? You possibly would lose more by defaulting on the purchase than you would by using these assets and paying any penalty on it.

6. If it comes down to it have you spoken with an attorney to see if any party in the sale acted less than honest or ethical? Hopefully you kept all of your paperwork and kept some type of journal outlining the process from initial look to today. Possibly someone dipped into your pocket and led you astray at some point.

7. Do you have a relative that can help? There are tax and mortgage implications with this so check them out before using gifted money or other relations as a loan source.

8. Have you spoken to your mortgage broker about other potential loan programs that could be used to obtain the other $5000? I'm sure this is not the first time something like this has happened and a good mortgage broker is creative enough to help.

I'm sure there are other things you can try but since we know so little of your situation it is not possible to tell.
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Old 09-06-2009, 01:00 AM
 
Location: Dallas/Fort Worth, Texas
4,191 posts, read 14,055,990 times
Reputation: 2649
You have a decision to make: Do you still want the house? If you could, would you pay the additional 5K knowing that you are overpaying for the house?

Read your lender letter "pre-approval or pre-qualification" it should say that the house has to appraise for the sales price. If it does, then you will get your earnest money back.

If you back out, the builder will put it on the market and he will have the very same issue with the next buyer. So it is in the builder's best interest to lower the price by the 5K. If you negotiated for them to pay your closing costs and title policy, they may want to back out of that part too to make up for the price reduction.

Let us know what happens.

Naima
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