Appraisal value for new home (home loan, loan, property, bank)

[relocate2tulare]

My husband and I are thinking about doing a "semi" custom home. (Taking an existing floor plan of a builder and modifying it alittle).

I have heard from the builder that the problem they are having is that their house is being appraised for about $15-$20K under the "actual" value.

1. How is a "house" appraised for a mortgage loan value, when it does not exist yet?

2. If the house is built and under the estimated value, do we have to pay the difference? and this includes if the build goes over estimate?

3. Can a home loan emcompass what we need to do the landscaping, (backyard with pool/spa) if the dollar amount has to go to two different contractors?

Thanks for any incite you can give me.

Kim

[maxima1966]

The appraisal would be based on the "plans and specification" of the home(square footage, Bedrooms etc.) provided to the appraiser. So the value is subject to the construction of the property. Then they'll compare that property to other similar houses in the area. If anything about the home changes, the appraiser can alter his value based on those changes. Keep in mind that when the prpoerty is finally completed, they will find updated houses that have sold and the value can go up or down at that time....If the value is under the sales price then it will depend on how much you put down on the house to determine if you can borrow more or have to come up with money out of your own pocket.

The value of the house would be based on whatever the contract of sales calls for...If you will have a pool installed after construction has completed outside of the contract the bank will not lend based on the additional value that the pool etc. would add.

Good Luck

[Goodpasture]

maxima pretty well nailed it.

There are a few things that are relevant as well. At least one, preferably ALL, comparables will need to be from a competitive builder or from a competitive subdivision. Further, if you add "upgrades" that make your house superior to the rest of the houses in the neighborhood, don't expect a dollar for dollar increase in value. As an example, in my market a $200,000 house with a pool has about a $5,000 contributory value to the house. Even if the pool cost $25,000, for a house of that price range, $5,000 is about all someone will pay for a pool. If your neighborhood is houses that range from 1800 sf to 2200 sf, and your modifications makes the house 3000 sf, you will have what is called super adequacy. This means your final value will more reflect the 2200 sf house than a 3000 sf house if that 3000 sf house was in a subdivision of 3000 sf houses.

[relocate2tulare]

Thank you both for your help.