Using Builder's Lender for Incentives (fees, rate, banks, upside)

[kmitch]

I am looking into building a home and they have a special going on that offers you 25k of incentives if you sign a contract this weekend. The rate the sales person quoted me was 6.125% or 6% if I buy points as part of their incentive. The incentives sound too good to be true. I just question whether I end up paying for those incentives somehow. I compared their fees to my banks and my bank's fees are about $3k less, however the builder has agreed to pay all my closing costs. My main question is using the builder's lender going to screw me in the end by me somehow paying for the incentives anyways? I hope I make sense, I am still trying to decide whether to go through with this or wait on it and hope they have other incentives pop up in the next month or so. Any advice?

[Annemieke Roell]

You should be aware of the fact that these incentives are seller concessions and that our house may be over valued because of that.

In other words ..... if the price is $100,000 for your house and the seller incentives/concessions are $20,000 ..... the MV of your house is most likely only $80,000. But because t was financed through the builder and was not appraised by an outside appraiser, this incentive/concession will not be shown.

So if you decide to sell your house after a year, you may find you are upside down in your mortgage because the market may not support the value.

Not knowing where you are located and other details this may or may not be the case. Just wanted you to be aware of the possibilities.

[sierraAZ]

Originally Posted by Schousse

In other words ..... if the price is $100,000 for your house and the seller incentives/concessions are $20,000 ..... the MV of your house is most likely only $80,000. But because t was financed through the builder and was not appraised by an outside appraiser, this incentive/concession will not be shown.

To tell you the truth, there's no winning in the appraisal game... Exactly for these reasons I hired my own appraiser because I was already aware of a few houses of the same model being sold for much less. Guess what I spent $350 to hear - the very same value since supposedly these sales are "unusual" and don't count in determining the market value. Only that in a few more months they may become "usual" and then you're screwed. It was too late in the game, I have no plans to move and I didn't cancel the purchase, but I'm still left with a bad taste in my mouth about that.

[Annemieke Roell]

Originally Posted by sierraAZ

To tell you the truth, there's no winning in the appraisal game... Exactly for these reasons I hired my own appraiser because I was already aware of a few houses of the same model being sold for much less. Guess what I spent $350 to hear - the very same value since supposedly these sales are "unusual" and don't count in determining the market value. Only that in a few more months they may become "usual" and then you're screwed. It was too late in the game, I have no plans to move and I didn't cancel the purchase, but I'm still left with a bad taste in my mouth about that.

I am not sure I understand what you mean. Could you please expand?

[sierraAZ]

Originally Posted by Schousse

I am not sure I understand what you mean. Could you please expand?

What I'm saying is that my own appraiser whom I hired and paid came up with the same number as the builder's appraiser and threw out recent comps (less expensive) justifying it as them being "unusual" and not valid in determining market value just like the builder's appraiser. I really wanted an honest second opinion and I didn't try to influence him one way or another, but I was expecting him to take them into account and he didn't. Had a gotten a lower appraisal, I would've had a leg to stand on for further negotiations with the builder.

[iupui1299]

Figure out what the final cost of your home will be and then do a search for similar pre-existing homes in the surrounding area. If they are listed for lower than what your final value is then it's a bad deal. If your home is listed for a decent amount lower than you may have a decent deal.