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Message
Home Construction Loan Appraisal Below Cost--Advice Appreciated
Posted on 10/18/12 at 12:10 pm
Posted on 10/18/12 at 12:10 pm
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?
7
Posted on 10/18/12 at 12:22 pm to BoudinJoe
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.
Posted on 10/18/12 at 12:22 pm to BoudinJoe
Are you talking about a preliminary appraisal as in before the house has been built?
Posted on 10/18/12 at 12:50 pm to BoudinJoe
quote:
Should I can the current contractor
Posted on 10/18/12 at 12:51 pm to BoudinJoe
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
Posted on 10/18/12 at 12:58 pm to BoudinJoe
quote:holy crap
My appraisal came in about $70k below cost
Posted on 10/18/12 at 12:59 pm to hawkeye007
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.
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 10/18/12 at 1:03 pm
Posted on 10/18/12 at 1:11 pm to BoudinJoe
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?
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?
Posted on 10/18/12 at 1:15 pm to ScottieP
quote:
did they forget to add the value of the lot?
or the trailer?
Posted on 10/18/12 at 1:56 pm to Chad504boy
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.
Posted on 10/18/12 at 1:57 pm to BoudinJoe
what's your cost per sq ft?
Posted on 10/18/12 at 1:58 pm to Chad504boy
~$135/sq ft building cost.
Posted on 10/18/12 at 2:02 pm to BoudinJoe
quote:so that's minus the lot?
~$135/sq ft building cost.
Posted on 10/18/12 at 2:05 pm to Chad504boy
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.
Posted on 10/18/12 at 2:09 pm to BoudinJoe
you know what they say about buying land... well it ain't true. People get fricked on lots all the time. 
Posted on 10/18/12 at 3:03 pm to BoudinJoe
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.
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.
Posted on 10/18/12 at 3:13 pm to BoudinJoe
41k lot with a 400+k house seems a bit out of wack but I'm no builder/appraiser.
Posted on 10/18/12 at 3:30 pm to BoudinJoe
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
Posted on 10/18/12 at 7:42 pm to hawkeye007
+20% in an area with little to no sales in four years is not a good situation.
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