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Dontcha Love It When Appraising A Builders House..

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Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Builders own home - as soon as I walk in the door, he takes me to his office, shows me the original plans for the house, and his notebook holding every receipt for the stone imported from Canada, and the Redwood for his garage doors, Italian marble used in the bathrooms.....I could go on and on......

Before he shows me the final cost, he informs me that the last appraiser that was there was "way off" in his estimate (never did tell me what it came in at, go figure)......and because the deal still worked, he didn't worry about it, but hopes that "I'll do a better job".......Was really hard to not roll my eyes......

He shows me the final cost to build.......$927,000 plus site costs, for a 4,200 sf. colonial built 2 years ago.....for the math challenged among us who are scrambling for calculators.....$220/sf. NOT INCLUDING SITE WORK!!!!!

I take the tour of the house, taking my notes, and to be blunt, it's nice, but not blowing up my skirt if you know what I mean......At the end of the inspection, he asks me what I think the house is worth, and I politely inform him I typically won't discuss value with a homeowner, especially since I haven't done any of the research yet, and its not really a good idea to give an opinion without having all the facts......

Him: "well, you know what I spent to build it, that should tell you something!!!!"

Me: "yes, but sometimes the construction costs can be well in excess of market value "

He smiles....."well, it's gotta be somewhere north of $1,500,000.....In fact, I don't think I'd even sell it for that, I just love the house too much." :blink:

Me: "well, I'll get the report done just as quick as I can, and get it over to the lender - Give them a call sometime next week, they should have it by then, and they can give you my opinion of value"

and I get the F out of dodge - How nasty are the phone calls from him gonna be when I bring it in around the $750K range?? I have 6 GREAT custom build homes, within a mile, within 3 months, all within 5% of GLA.....I'm NOT looking forward to it. :eyecrazy:
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Sounds like he's been to too many builder's trade shows. They alway try to sell you on "improve the value of your home". :rolleyes:
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Remember my new Mantra. Your going to need it.

"Your not my client, I can't discuss it with you"

Repeat after me,
"Your not my client, I can't discuss it with you"
"Your not my client, I can't discuss it with you"
"Your not my client, I can't discuss it with you"
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
I have never met a builder who was honest about his actual costs, lot purchase price, his profit or how much he was losing on every home he builds. The lot price is always a minimum $10,000 more than what they paid and they just keep on spinning their tales even though they know you know the truth.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
You could always play real dumb and say, "Wow. By the looks of the costs, you paid way too much for this house. Who did you say your builder was?"

And of course then within 3 hours you would have a fax cancelling the order and you would hence forth forever be thankfully placed on the builders list of dumb appraisers.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
About 6 months ago I was eating lunch with our lunch group and one of the guys told me he was negotiating to purchase a home in one of the most exclusive subdivisions in the region. He didn’t want to commit on a contract without some advice because for some reason he felt uneasy about the price. The house was about five years old and the owner was the principle builder in the subdivision and the local area for this type home.
The builder greeted me at the door and was the most cooperative homeowner I have ever encountered. I soon found out why. The house had been on the market for 18 months with not even an offer and he wanted to know why. Didn’t take me long to figure it out. The basic house was very high quality with 3,500 square feet of very high quality GLA some rooms with 20 foot ceilings, etc. There was an attached garage with a 700 sq ft frog (family room over the garage) and the quality of construction of this room was basic project house quality. The average house in the subdivision contained 3,300 sf and the average price was $320,000. The Realtor extracted a price of $100 per square foot from the market sales, applied it to the subject’s 4,200 sf, added $30,000 for the commission and came up with a price of $450,000. That is about a $50,000 error in estimating the value of the house plus adding the commission on top of that. It fooled the builder, it fooled the Realtor, but it didn’t fool the market.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
I just finished one- "superadequate". He tells me he is a "master builder". Well I'll tell you what, he ain't a master designer.

I told him to hire me before the next one-for a modest consulting fee of $ 1,000. You would make consideerably more money on the next sale.
 

Frank Bertrand

Junior Member
Joined
Aug 21, 2002
Professional Status
Certified General Appraiser
State
Pennsylvania
besides the builders, how about a wood nut?

Did a custom (and how) home on a private lake.

Exterior was all california redwood. Interior, each room had a different wood wall and ceiling (yes ceiling too). There is the Butternut room, the Oak room, Maple room, Cherry room, etc. Even the damn garage was paneled.

Lucky he is right by a lake as nearest fire company is 20 minutes.

And its' all worth more (he says)as all the interior wood was cut on the property and he sawed,kiln dried it, and planned it etc. behind the house is a oil fired heater that steams wood beams so they can be bent into place for the ceilings.

Talk about going from the woods to the house. Whew!!

Then the guy asks about 10x, "well, what do you think?" "how about my swedish sauna?" "how about my native stone fireplaces with mill stones embedded into the stone work?"

I was doing a right of way for another wood worker and his entire house was Cherry. the house AND furnishings. spent a lifetime doing it. It was something to see the interior and all the furniture match. Kitchen dining room, chairs, book cases, etc. Even a curved stairway. Walked away just shaking my head in wonderment.

(These two homes are enough to blow up one's skirt, if one wears skirts!!)
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Some good and potent replies to remember, for homeowners like these are certainly frustrating to be with.....especially when they follow you into every room and never stop "selling" you the house. Whether they be the home's builder, or you are in a realty agent's home....they are absolutely in a fog with the notion that any and every dollar spent is directly connected to an equal-or-greater value increase perception. There is a law of diminishing returns. Here's the kicker....if their neighbor had the very same house and total property, that neighbor's property would NOT be considered to have the same "value".

I like Richard's reply..."Oooo, with costs like that, it looks very apparent to me that you over-paid for this house". You say words like that just after you have started your car, and are putting up the driver's window...and starting to roll away slowly with a concerned look on your face. Sometimes, we can have fun in this line of work.

One word that I think is dramatically over-used is "upgraded". If a builder's sales rep or another realty agent is attempting to sell a new home and they do NOT say or print (in the MLS text) that the house is upgraded they probably suffer the threat of being fired. I know, I know, I know, every new home being sold is "upgraded"....and so are all the other sold comps which are available for my comparison process ! I would almost hate to see a new house that was NOT upgraded. Flooring of cardboard stapled into plywood, plastic sinks for the kitchen and baths, etc. etc. Yes, Mr. New Car Dealer, would you please upgrade that car I'm buying and put 4 tires on the wheels !
 
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