Construct to Perm question

[Elizabeth50]

What do you do with the Contract section when the loan is for Construct-to-Perm financing? I completed 2 appraisals on 2 different properties for Construct-to-Perm financing & was given the purchase agreements between the builder and borrower, as well. The first appraisal came back requesting that the contract information be removed from the Contract section and added to the addendum, instead. The 2nd appraisal came back requesting that the contract info be added to the Contact section. The same AMC/lender for both, but completely opposite requests. Thanks for your time and responses.

 

[CGinMN]

Different underwriters are looking at the reports. Someone just asked this today.

Thread 'New MH on owner's site'

Apr 3, 2025

It is my opinion that the contract section is left blank because it technically is not a sale. It is new construction. For years I have submitted the reports without the contract section filled out and noted the terms of the agreement in an addenda. On recent report the reviewer is insisting I include the construction agreement in the contract section as if it is a purchase. I am interested in your thoughts. I can't believe I am wrong and twenty years of reports have been accepted as submitted, many to this same lender. Thoughts?

• mp2277
• Replies: 35
• Forum: Urgent - Help Needed

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[Tom4value]

As with most appraisal answers, it depends. If the borrower already owns the land, it is not a purchase so you leave it blank. If the loan includes purchasing the land, you fill it in. Of course, in both cases, explain, explain.

 

[sputnam]

What do you do with the Contract section when the loan is for Construct-to-Perm financing? I completed 2 appraisals on 2 different properties for Construct-to-Perm financing & was given the purchase agreements between the builder and borrower, as well. The first appraisal came back requesting that the contract information be removed from the Contract section and added to the addendum, instead. The 2nd appraisal came back requesting that the contract info be added to the Contact section. The same AMC/lender for both, but completely opposite requests. Thanks for your time and responses.

People... appraisers, lenders, buyers, sellers... everyone... often get hung up on form rather than substance. USPAP requires the appraiser to analyze ALL agreements of sale that are current as of the effective date of the appraisal. It also requires the appraiser to include a summary of the results of the analysis in the appraisal report. It really doesn't matter where in the report the summary appears.

Tom, above, is correct. If it's a contract with builder to construct a dwelling on property already owned by the borrower, it's not required. It's also not prohibited.