New Development

Discussion in 'General Appraisal Discussion' started by philip, Dec 25, 2004.

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  1. philip

    philip Sophomore Member

    0
    Jan 29, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Apprasing a sfr that is a new development. Owner Paid $345,000 2 months ago. Three of the same model match with same upgrades have now sold for $435,000 by the builder. New base price of subject model is $424,000 No resales in project. Does it make sense to use the new sales from the builder.
    Thanks In Advance
     
  2. Chris Colston

    Chris Colston Elite Member

    0
    Jul 24, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    As long as you can also find some outside of the development sales that support the builder. Any resales inside yet or MLS listings of inside homes? Any of these support the builder? Does having a house already built warrant any kind of discount or incentive over waiting for the builder to complete a new house?
     
  3. jay trotta

    jay trotta Elite Member

    3
    Feb 8, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Connecticut
    Philip

    what costs have risen for the builder since he last contracted the subject Price??

    closing was 2 months ago, but it was probably contracted 6-8 months ago; don't know where your located, so can't help you with any other thoughts.


    If you put your location, you may aquire input from some folks near or in your area.

    :ph34r:
     
  4. philip

    philip Sophomore Member

    0
    Jan 29, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Thanks for the responses.
    As I mentioned no resales in project. Also No MLS listings. I have looked outside the project. Im in California. Project in Indio Riverside County. I have been waiting for owner to respond to when contract entered.
     
  5. leelansford

    leelansford Elite Member

    12
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    Look outside the subject's project for market data. There are any number of possible scenarios that might explain what is happening in the subject's subdivision.
     
  6. CANative

    CANative Elite Member

    25
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Did you treat yourself to a date shake while you were in Indio?

    I've noticed in some areas I do where the first new tract of homes goes up in an area with few tract type subdivisions, the builder is kind of timid about the pricing of the first house or two sold. After generating some interest in the new tract, they start creeping the prices up.
     
  7. philip

    philip Sophomore Member

    0
    Jan 29, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Yeah.. Except not at Hadleys. Not so good.
     
  8. George Hatch

    George Hatch Elite Member

    17
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    It is very common with new subdivisions here in SoCal to involve some speculators and short term investors in the beginning. I appraised a 36-unit subdivision for the construction loan and was talking to the developer. He said they had divided their prospective buyers into several categories; Category A included the investors, Category B included friends and relatives, Category C included prior investors and those buyers who were a sure bet with financing, and Category D was everyone else. At that time, this developer didn't think they'd have to dip into the Cat C lists at all, so I guess the Cat D folks were totally out of luck. This developer knew for a fact that many of the homes would be immediately flipped at the time of closing.

    If you're planning on using the insider information provided by the developer, make sure you do some personal verifcation with the buyers to find out if there are any non-arms length transactions among them. Sometimes the sales staff will screw up and let the cat out of the bag if you ask them in a discreet manner that doesn't betray the real reasoning behind your questions. Other times they've been thoroughly briefed, in which case you should be prepared to be lied to.

    It would be foolish to fail to research some outside sales to be able to demonstrate whatever the market trends are. Go to Coachella or Thousand Palms if you have to but find some outside sales.
     
  9. OCApp

    OCApp Member

    0
    Jan 19, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    is the house you are appraising finished? or will it be under construction for several months yet. same thing goes for the new comps. are they in a newer phase not scheduled for completion until after your subject closes escrow. if your subject is complete, i would not rely exclusively on homes under contract that won't be complete for 4 or 5 months. markets can change and if interest rates increase buyers may back out.

    i would definitely try to find at least one or two resales of almost new homes in he same general area as the subject. here in orange county at least, the new home market seems to be slowing down some. some builders have reported cancellations and many builders are offering their homes through the local mls (and paying outside agents commissions to bring in buyers).
     
  10. Karl

    Karl Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    INDIO!! Damn pretty soon they'll have Lake front sales at Salt and Sea, Knew I ashould have bought Bombay Beach, in 1996 Could have sold that to some unsuspecting New englanders, like there selling AZ City to Californian's Anyone see the Eric Estradra add yet??

    If your Appraising & taking contractors word for sales: In MY OPINION U are NOT Appraising.

    OH!! Thats right the CONTRACT sets the Market, Got a willing Buyer & Willing Seller who am I to say that is NOT the Value.
     
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