Question on a UW request for 2 comparables out of the neighborhood for new construction.

[Sadie]

But why does it have to show acceptance in a different established neighborhood? It could be accepted there and not in its own neighborhood, or vice versa. Fannie requirements seem fine, the lender's requirement is just boogling. Why not just use two in the same neighborhood outside of the same subdivision like Fannie requires. But lender can do what they want, but no point, its like wanting to know if a new construction in Manhattan is accepted in the Bronx, it really has no relevance.

I agree. I think the OP can push back on this. Scope creep.

 

[Sadie]

Agree. The uw is wrong.

But.....the op was also confused on this: The UW is asking for *2* comparables out of the neighborhood.

Why 2? Most appraisers use fannie guidelines on new construction homes, which is 1.

I posted freddie where it states 2*.

Freddie:
At a minimum, at least *two* comparable sales must be sales in which the builder or developer of the subject property is not involved in the sale transaction.

*Note....it says nothing about pud, neighborhood or subdivision for the second comp.....

We can't always know what goes on in the minds of underwriters.

 

[NC Appraising]

We can't always know what goes on in the minds of underwriters.

No but our scores do.

That is the sad part. Rejection, less work.

 

[Surf Cat]

I agree. I think the OP can push back on this. Scope creep.

We can't always know what goes on in the minds of underwriters.

Not so sure......OP is unclear and has not commented further on details or provided more clarification.

 

[Sadie]

Not so sure......OP is unclear and has not commented further on details or provided more clarification.

Apparently we don't know what goes on in the mind of the OP either.

 

[ZZGAMAZZ]

With New Construction you have to have an outside development sale. Makes total sense. The number doesn't matter to me if the report is solid. 1-2-3-4, they can ask what they think they need. I have found, when UW is seeking other sales, to ASK, what they have. We know the largest Lenders & AMC's have some market data at their disposal. Put the question back to the UW, what do you have? EZ to tell if they know anything and usually with stop the extra comp request.

I always presumed that any out-of-development comp requirements was meant to determine whether "ALL" of the comps within the same development are disparate from similar developments. But if so, what TF is one or two out-of-deveoopment comps going to demonstrate, or would ANY client ever base its lending decision on such a small sample size of disparate properties? If not, why bother?

 

[J Grant]

I always presumed that any out-of-development comp requirements was meant to determine whether "ALL" of the comps within the same development are disparate from similar developments. But if so, what TF is one or two out-of-deveoopment comps going to demonstrate, or would ANY client ever base its lending decision on such a small sample size of disparate properties? If not, why bother?

Because the definition of MV is the open market ( not just restricted to X community) and most buyers look in several or more similar communities instead of just one ( though there are cases where a buyer wants the one and only X community) - houses compete against other houses , in X Y and Z communities. In resales it is less of an issue but new construction is priced differently and builder premiums might not always transfer to resale house was put on open market prices.

 

[J Grant]

Imo, those who see adding a new construction comp outside of a new construction PUD as some stupid reqieremtn and just dump a sale in and give it no weight should not be doing new construction appraisals because it is highly probable that all they re doing is rubber stamping the sale price - and we have WAIVERS for that.

I am not saying by any means tht appraisers should look to "kill" a deal, but their opinion of MV is supposed to support the MV opening not the SC price - when the SC price is also the opinion of MV , it should have robust support, and that means, in new construction, seeing what resales go for in the subject community and outside of it in similar competing communities or homes

 

[shrubberyvaluation]

Imo, those who see adding a new construction comp outside of a new construction PUD as some stupid reqieremtn and just dump a sale in and give it no weight should not be doing new construction appraisals because it is highly probable that all they re doing is rubber stamping the sale price - and we have WAIVERS for that.

I am not saying by any means tht appraisers should look to "kill" a deal, but their opinion of MV is supposed to support the MV opening not the SC price - when the SC price is also the opinion of MV , it should have robust support, and that means, in new construction, seeing what resales go for in the subject community and outside of it in similar competing communities or homes

I think its stupid to pass over good new construction comps in the subject's neighborhood, but outside of the subject's PUD/subdivision. Giving this "comp" outisde of the subject's neighborhood weight would in many cases be used for rubber stamping. It just as random as having a requirement to use a comp in a different city or a different state. The point should be to have a comp or 2 outside of the builder's control but within the same neighborhood if possible.