Contract, New Construction

[ZZGAMAZZ]

Reviewing the Purchase Agreement for a new construction tract SFR, I noticed two interesting items and wonder whether peers are familiar with them:

1) The appraiser cannot make adjustments for Lot Premiums [seems to me to affect the appraiser's Scope of Work]

2) The buyer is not responsible for his offer or the EMD/downpayment if the appraisal Opinion of Value does not support the contract price. [I don't know if all new construction contracts include this type of stipulation.]

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I'm trying to figure out adjustments for differences between the subject incentives and comp incentives for closing costs. If the subject receives $10,000 and a comp receives $15,000, would the adjustment be (+) $5,000 because the comp incentive is $5,000 more, reducing the price by $5,000 less that the subject? I also was told by an appraiser that FNMAE only permits downward comp incentive-based adjustments in the SCA.

Then the Doc Stamp protocol also s intriguing. The formula to determine selling price of a new construction SFR, per various Title offices is:

Doc Stamp divided by 1.1 multiplied by 1000 = Sales Price

But...who determined that formula, and why does it pertain to all sales? Why doesn't title just provide the appraiser with the selling prices rather than the formula? And WHY does every Sales Office provide appraisers with the phone numbers of Title and/or Escrow--when the first call the appraiser has to make is to obtain the email addresses--rather than to provide the appraiser with the email address to make the process more efficient?

 

[Joe Flacco]

I saw some wild games played with the lot premiums by a big national builder in 2022. Like a $600k lot premium for a lot worth around $600k. No significant differences between the lots. They used the lot premium to increase the price in 2021-2022. Now the lot premium is back to around $100k. Some people got ripped off.

 

[Dublin ohio]

1) The appraiser cannot make adjustments for Lot Premiums

That is in the purchase contract?

 

[Joe Flacco]

What the sales agreement says an appraiser can or not do is irrelevant.

 

[Dublin ohio]

Doc Stamp divided by 1.1 multiplied by 1000 = Sales Price

But...who determined that formula, and why does it pertain to all sales?

Our doc stamps are calculated on 'X" amount per thousand. But that "X" is different in each county.

 

[ZZGAMAZZ]

What the sales agreement says an appraiser can or not do is irrelevant.

Is the purchase agreement for a new construction SFR assumed to be part of the client Engagement with an appraiser?
Would the appraiser comment on an item in the purchase agreement with which he or she can't comply?

 

[George Hatch]

I don't know, but it seems like these clauses might relate to limiting the use of an appraisal contingency in the sales contract. Not necessarily an intent to dictate terms to the appraiser.

 

[ZZGAMAZZ]

I don't know, but it seems like these clauses might relate to limiting the use of an appraisal contingency in the sales contract. Not necessarily an intent to dictate terms to the appraiser.

And it's a coincidence that an appraisal yesterday (not new construction) was a refi of a SFR that sold about 4 months ago. Per the borrower she purchased the home with a loan based upon an appraisal waiver, but that "something went wrong" and the same lender now requires an appraisal after-the-fact. My appraisal exceeded the recent selling price by about 2% but I don't know the implilcations of a "post-purchase appraisal" that did not support the prior contract!!!

 

[ZZGAMAZZ]

I saw some wild games played with the lot premiums by a big national builder in 2022. Like a $600k lot premium for a lot worth around $600k. No significant differences between the lots. They used the lot premium to increase the price in 2021-2022. Now the lot premium is back to around $100k. Some people got ripped off. Joe f, WHERE YOU BEEN?

 

[sputnam]

A purchase agreement is binding on the Buyer and Seller. It is not binding on the appraiser. In the appraisal process, the contract has to be reviewed, analyzed, and the results of that analysis have to be summarized in the appraisal report. It has no authority or bearing on the valuation analysis.