Where Do Appraisers Come Up With Stuff Like This?

[Meandering]

As some of the posts in this thread illustarate, this continues to be an issue, in part, because some assume/believe that cert 8 applies to all new home sales

Some apparently connot understand the distinction between the sale of a new home under construction and the combination of a vacant land sale with the cost to build a new home to "create" a sale.

Thank you Danny,

And isn't that what is illustrated in the OP that in the new subdivision the homes were under construction when sold, so the buyers bought the tangible land, and the personal property of the contract to build or to complete the building?

Surely they did not buy a completed home, if they sold while under construction. They bought a contract.

Oh Darn, that's not real estate.

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[Amy Perkins]

Was the subject constructed at the time of sale? Even if it was not at the time of sale, you still need to find at least one sale outside the subject's development and one inside. Unless you have none, which has happened to me before, that was fun... Not!

 

[Mike Garrett RAA]

No common sense!

 

[J Grant]

Cert 8 refers to a buyer buys a vacant site SEPARATE from the improvement, a person buys a site, then at some point in time they contract to build a home on the site.

In builder sales, buyers walk in and buy model house on a base lot as one package; whether the house is built yet, mid construction, or not yet started construction.

 

[Terrel L. Shields]

Surely they did not buy a completed home, if they sold while under construction. They bought a contract.

Oh Darn, that's not real estate.

Disagree. A contract for sale implies the date is in the future for the transaction, and it subject to the property being completed. Combining land and building is not the same thing. The builder owns title to the property until it is complete. The buyer then can walk through and say yes or no. The bank wants the appraisal prior to that closing because they have to fund the loan. They will not fund the loan until the property is valued.

 

[J Grant]

Read page one URAR, there are three choices: existing, proposed, or under construction. All of them represent a presumed passing of title (RE rights) as of the eff date (per the MV definition). Which translates to our appraising either as is, or subject to (completion)

People might want to spend less time scoffing at the form and more time reading it. It conveys a wealth of information. Not the form's fault if someone filling it out is an idiot. Any of us can have an idiot moment or two in our careers, but we are supposed to learn from those moments, not keep repeating them.

 

[DWiley]

Thank you Danny,

And isn't that what is illustrated in the OP that in the new subdivision the homes were under construction when sold, so the buyers bought the tangible land, and the personal property of the contract to build or to complete the building?

Surely they did not buy a completed home, if they sold while under construction. They bought a contract.

Oh Darn, that's not real estate.

.

I hit "like" for this post, because it illustrates so well the point of my prior post.

 

[Meandering]

Disagree. A contract for sale implies the date is in the future for the transaction, and it subject to the property being completed. Combining land and building is not the same thing. The builder owns title to the property until it is complete. The buyer then can walk through and say yes or no. The bank wants the appraisal prior to that closing because they have to fund the loan. They will not fund the loan until the property is valued.

thank you Terrel,

They are funding the construction loan,

which gets converted to a primary mortgage

at the completion of the construction.

at the time of sale,

when the "need for an appraisal" occurs

it is land with a contract to construct,

which triggers the initial construction loan, and not a primary mortgage.

Like pulling teeth around here some days.


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[J Grant]

at the time of sale, when the "need for an appraisal" occurs
it is land with a contract to construct,

At time of sale (contract), a builder sale acceptable as a comp is a land and house sale TOGETHER, with appraisal done subject to completion.

It is not a land sale and then a separate contract to construct sale (which would be two separate transactions combined to create a sale , and thus not acceptable as a comp ).

which triggers the initial construction loan, and not a primary mortgage.

it is not a construction loan, which consists of $ amounts released to a builder or contractor in phases as sections of house is completed. It is a primary mortgage applied for by borrower and funded when house is completed.

 

[Meandering]

it is not a construction loan, which consists of $ amounts released to a builder or contractor in phases as sections of house is completed. It is a primary mortgage applied for by borrower and funded when house is completed.

At the time of the meeting of the minds, no house exists J.

That's why it is a construction loan not a primary mortgage.

8. I have not used comparable sales that were the result of combining a land sale with the contract purchase price of a home that has been built or will be built on the land.

Just because the loan gets converted to a primary mortgage at the end of the construction does not negate that the sale was the result of combing the land with construction contract - as that is when the price was determined, which funded the construction loan, and gets finalized in the appraisal at the end of the construction contract for the primary mortgage. The sale was the result of combining land and construction of a home that has been built.

Gheeze.

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