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BoudinJoe
USA Fan
Member since Oct 2007
1900 posts

Home Construction Loan Appraisal Below Cost--Advice Appreciated
My appraisal came in about $70k below cost. Should I can the current bank and move on to another and start the process all over again?


VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
24866 posts
 Online 

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
You might want to find out why your paying $70k more than the house is worth. Bad location? No comps to support the value (that's a very bad thing for you)? Etc.


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Who Me
LSU Fan
Ascension
Member since Aug 2011
7090 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
Are you talking about a preliminary appraisal as in before the house has been built?


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Chad504boy
New Orleans Saints Fan
Member since Feb 2005
134888 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
quote:

Should I can the current contractor


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hawkeye007
LSU Fan
Member since Feb 2010
3968 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
first if you built the house then the value should be the cost to build. but i would be very troubled if i built a house that appraised less than the cost it took to build it. sounds like the area couldnt support the cost


Pilot Tiger
Georgetown Fan
North Carolina
Member since Nov 2005
72047 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
quote:

My appraisal came in about $70k below cost
holy crap


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guttata
LSU Fan
prairieville
Member since Feb 2006
21750 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
Sounds like you are planning on overbuilding for your area. I'd either change my plans or change the location. If my preappraisal would have been $70k over the cost to build, I would think something is majorly wrong and wouldn't even proceed down the current path.
We just finished our construction, and our preappraisal was was about $10k more than the cost. Our post construction appraisal ended up $100k more than our cost.
This post was edited on 10/18 at 1:03 pm


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ScottieP
LSU Fan
Baton Rouge, LA
Member since Feb 2004
1933 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
Either something is wrong with the appraisal, you are getting screwed by the contractor, or you need to build a different house.

Since the house is not built I assume the appraisal was done off the plans and comps in the area. Make sure the appraiser is using the same materials you are. 70k is a bunch, did they forget to add the value of the lot?


Chad504boy
New Orleans Saints Fan
Member since Feb 2005
134888 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
quote:

did they forget to add the value of the lot?





or the trailer?


BoudinJoe
USA Fan
Member since Oct 2007
1900 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
It's a one-acre lot in a nice development in the country. The builder's costs seemed in line with what the bank expected. The bank is pissed and believes the comps were bad. The houses in the development are $350+. I'm building a $415,000 house. there haven't been many sales in the area in about 4 years.


Chad504boy
New Orleans Saints Fan
Member since Feb 2005
134888 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
what's your cost per sq ft?


BoudinJoe
USA Fan
Member since Oct 2007
1900 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
~$135/sq ft building cost.


Chad504boy
New Orleans Saints Fan
Member since Feb 2005
134888 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
quote:

~$135/sq ft building cost.

so that's minus the lot?


BoudinJoe
USA Fan
Member since Oct 2007
1900 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
That is minus the lot. The lot was $41k. The appraisal came in at $118/sq ft with the lot! And, I have the note for the lot through the same bank! They are basically telling me my house is $100 sq ft and my lot is worth half of what they appraised it at 3 months ago.


Chad504boy
New Orleans Saints Fan
Member since Feb 2005
134888 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
you know what they say about buying land... well it ain't true. People get fricked on lots all the time.


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CajunTigerBabe
LSU Fan
Lafayette
Member since Sep 2012
209 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
If the bank believes the comps were bad, then they can contest the value and have the appraiser provide some additional comps. You can also request a 2nd appraisal.

If you are adding a lot of extras in your home, it won't always be reflected in the appraised value. In the end, you may need to cut some of your upgrades or be prepared to anty up the cash. I am in the Lafayette area and we do a lot of construction loans and construction to perm loans. We see the appraisal come back short often.


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dagrippa
LSU Fan
Saigon
Member since Nov 2004
8527 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
41k lot with a 400+k house seems a bit out of wack but I'm no builder/appraiser.


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hawkeye007
LSU Fan
Member since Feb 2010
3968 posts

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
joe no offense when i say this but $135 a sqft is freaking robbery! and if houses in the area are 350+ then thats a 65k swing..i call that biggest house on the block..not a good thing


VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
24866 posts
 Online 

re: Home Construction Loan Appraisal Below Cost--Advice Appreciated
+20% in an area with little to no sales in four years is not a good situation.


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