Builder refusing entry under construction

[Tom4value]

Well, this is a first. Got an order for a new construction condo. Emailed contact about the inspection. Asked if it is secured and will need to make an appointment or can I just go on my own. She responded that the builder does not allow appraisers in when it is under construction. I can take exterior photos and I can visit a model of an identical unit in a different development in a different town. It is after hours so I haven’t actually spoken to her yet or notified my client.

Has anyone encountered this? If so, are lenders ok with just going on plans and specs? If property is under construction I always talk about the current construction status. Obviously, I can’t do that now.

 

[Terrel L. Shields]

I have almost never been asked to appraise a property that is in the middle of construction. My clients insist on the builders get approval of a loan before starting construction. Something about prior construction could have a first lien ahead of them. I recall a guy who did the dirt work on a place he was buying before he closed the loan and the bank rejected the loan because of it. Someone else ended up buying the land.

But I would go back to the client and see if they can get a workaround. Sometimes they have more stroke with the builder or agent.

 

[Mike Ault]

Well, this is a first. Got an order for a new construction condo. Emailed contact about the inspection. Asked if it is secured and will need to make an appointment or can I just go on my own. She responded that the builder does not allow appraisers in when it is under construction. I can take exterior photos and I can visit a model of an identical unit in a different development in a different town. It is after hours so I haven’t actually spoken to her yet or notified my client.

Has anyone encountered this? If so, are lenders ok with just going on plans and specs? If property is under construction I always talk about the current construction status. Obviously, I can’t do that now.

The lender will have to be okay with it. Just don't let them coerce you into providing an "as is" value for incomplete improvements. Completing the appraisal on a plans & specs basis in the above scenario wouldn't bother me. Nothing which couldn't be solved by an additional trip fee if the lender finds it ultimately unsuitable for their purposes.

 

[KHS445]

Personally, I would toss it back to the lender. You have made contact (verify in the morning) and have been refused access.

 

[Tom4value]

The lender will have to be okay with it. Just don't let them coerce you into providing an "as is" value for incomplete improvements. Completing the appraisal on a plans & specs basis in the above scenario wouldn't bother me. Nothing which couldn't be solved by an additional trip fee if the lender finds it ultimately unsuitable for their purposes.

No, they won’t. Here it is typical and I do a HC “subject to completion” and then do a 1004D when completed. However, I do talk about current status of completion.

 

[Tom4value]

Personally, I would toss it back to the lender. You have made contact (verify in the morning) and have been refused access.

Oh, I will. Just want to know if anyone else has encountered this and if it was a problem with the lender.

 

[shrubberyvaluation]

Well, this is a first. Got an order for a new construction condo. Emailed contact about the inspection. Asked if it is secured and will need to make an appointment or can I just go on my own. She responded that the builder does not allow appraisers in when it is under construction. I can take exterior photos and I can visit a model of an identical unit in a different development in a different town. It is after hours so I haven’t actually spoken to her yet or notified my client.

Has anyone encountered this? If so, are lenders ok with just going on plans and specs? If property is under construction I always talk about the current construction status. Obviously, I can’t do that now.

I have not, that is up to your client, as long as you don't misrepresent what you did and don't use the 1004. Only time it happened to me was temporarily because they were fuming it or something.

 

[George Hatch]

I assume you're valuing for the buyer's permanent financing (GSE pipeline or its equivalent) and not for the developer's construction loan (usually an FRT)

Unless there's an "as is" required for the assignment it doesn't much matter what the current condition is like because that isn't what you're valuing; you're valuing the hypothetical "as if completed" condition which will not exist until the construction completes.

Whatever the inspection requirements are for the assignment will be determined by the client. Better to ask and know than to assume but not know.

 

[Mike Ault]

No, they won’t. Here it is typical and I do a HC “subject to completion” and then do a 1004D when completed. However, I do talk about current status of completion.

I have never had a builder refuse access to a subject under construction myself, either (other than the occasional "we only let "number hitter" appraise our homes"). I would talk about "current status of completion being undetermined" due to builder refusing access. Nothing in USPAP demands the appraiser make a personal inspection for an appraisal of a property under construction (or any other property, for that matter).

 

[chad hampton]

I’d just go out and appraise it. Most homes are opened in the morning for the trades to go in. Others have an MLS key at the sales office. In 25 years I’ve had trouble accessing maybe 2-3 new homes just showing up anytime I wanted.

If the home isn’t 95% done it could be an insurance issue. Construction sites are dangerous places.