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A Sale Is Not Closed Unless The House Is Completed?

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Michigan CG

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I have a chief appraiser telling me a house is not a closed sale according to Fannie (and possibly USPAP) unless it is built and the construction is complete.

When he said USPAP I knew that it isn't addressed in there so I strongly question his other premise. I looked through the Fannie Mae guide and it says nothing. Two of my comparable properties are closed sales and verified that the closing took place at a title company and that Realtor commissions were paid.

The review appraiser says that they are "contract sales", not closed sales and that no appraiser should use these sales unless construction is complete.
 
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bnmappraisal

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The review appraiser says that they are contract sales, not closed sales and that no appraiser should use these sales unless construction is complete.
I'd also counter with your research that they ARE indeed closed. It seems you have 2 data/verification sources (Realtor and title company) MLS and/or county/city records would also be acceptable
 

nstanbru

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California
In my area (can't comment on your area), a sale has closed when the deed is recorded. Is it possible that the sales you have are for the recording of the sale of the lot prior to construction?
 

CindyR

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The review appraiser says that they are contract sales, not closed sales and that no appraiser should use these sales unless construction is complete.
Am i missing something? Why would the review appraiser believe they are not complete? Are they new construction (not that that means they are incomplete) but they might show up in some database as not having any improvements or something... But i still don't know what caused the review appraiser to declare that construction in not complete.
 

Michigan CG

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In my area (can't comment on your area), a sale has closed when the deed is recorded. Is it possible that the sales you have are for the recording of the sale of the lot prior to construction?

Nope, these are sales of homes to be built. One is almost complete and the other has a poured foundation.
 

J Grant

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Were these comps on your grid? Or sales figures form builder regarding what has sold in the community?

t is unusual for a home to close before a C of O is granted/move in ready, but if you saw the HUD closing statement then they closed .
 

CindyR

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Nope, these are sales of homes to be built. One is almost complete and the other has a poured foundation.
Well that explains it. They are incomplete. My MLS would not show that as sold until the home was actually built so i have no experience with your scenario.
 

A K

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Maryland
It is unusual that the sale would close and be recorded before the improvements are complete. That would mean that the buyer paid in full up front for a house that does not exist yet.

I see some agents marking sales as closed in MLS before a house is built when the MLS listing is for home to be built and requires buyer to buy the lot and get a construction loan. Some agents will mark it as closed sale when the lot sale closes.
 
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