New build with temporary countertops

[Mark K]

Exactly.
The appraiser marks complete, that house is complete and has a functional kitchen, but X misc item is not finished or X item is a lower cost installed to be replaced later by higher quality item.

The concrete slab is a functional floor. Counter tops can cost as much as the flooring so I'm guessing some appraisers wouldn't have a problem calling it 'complete' without finish flooring. Calling an incomplete house complete is misleading and, hopefully, an appraiser would face sanctions if caught doing it.

In this area, if the final inspection found the house incomplete missing things like, well countertops for example, I'd note that its is incomplete, check the spec sheets for the type of counter top specified, and estimate, on the high side, the cost to complete. The lender would take my estimate, multiply by 1.5 or 2X the estimated amount (to encourage the builder to return and complete the job), and hold that amount in escrow until completion. At that time, the lender would contact the appraiser to inspect for completion and the lender would release the escrow amount to the builder, and charge the builder my inspection fee.

I'm surprised to read that so many appraisers are apparently willing to toss ethics to the wind and lie on a completion form.

 

[Jayjay25]

The concrete slab is a functional floor. Counter tops can cost as much as the flooring so I'm guessing some appraisers wouldn't have a problem calling it 'complete' without finish flooring. Calling an incomplete house complete is misleading and, hopefully, an appraiser would face sanctions if caught doing it.

In this area, if the final inspection found the house incomplete missing things like, well countertops for example, I'd note that its is incomplete, check the spec sheets for the type of counter top specified, and estimate, on the high side, the cost to complete. The lender would take my estimate, multiply by 1.5 or 2X the estimated amount (to encourage the builder to return and complete the job), and hold that amount in escrow until completion. At that time, the lender would contact the appraiser to inspect for completion and the lender would release the escrow amount to the builder, and charge the builder my inspection fee.

I'm surprised to read that so many appraisers are apparently willing to toss ethics to the wind and lie on a completion form.

Winner winner chicken dinner!

 

[J Grant]

The concrete slab is a functional floor. Counter tops can cost as much as the flooring so I'm guessing some appraisers wouldn't have a problem calling it 'complete' without finish flooring. Calling an incomplete house complete is misleading and, hopefully, an appraiser would face sanctions if caught doing it.

In this area, if the final inspection found the house incomplete missing things like, well countertops for example, I'd note that its is incomplete, check the spec sheets for the type of counter top specified, and estimate, on the high side, the cost to complete. The lender would take my estimate, multiply by 1.5 or 2X the estimated amount (to encourage the builder to return and complete the job), and hold that amount in escrow until completion. At that time, the lender would contact the appraiser to inspect for completion and the lender would release the escrow amount to the builder, and charge the builder my inspection fee.

I'm surprised to read that so many appraisers are apparently willing to toss ethics to the wind and lie on a completion form.

Nobody is lying !! The house IS complete - a cheap plastic vs a granite counter does not mean a house is not complete !!
AND the appraiser discloses the counter substitution,, so there are no lies there either . Appraiser can provide estimate of cost to cure and impact on value. What the lender does after that is up to them.

Imo it sounds confused as to what is happening - if you note the house is not complete, and then lender sends you back out for completion, after counter is installed that does not sound like the house closed with an escrow hold back. Is the house vacant, or occupied when you go back for the final after counter is installed ?

PS if a missing item is not a safety or security item, a house can close without flooring finish, without sod, with a low quality counter etc. It can impact value of course, but there is no rule saying a house must have those items to close. s

 

[shrubberyvaluation]

Nobody is lying !! The house IS complete - a cheap plastic vs a granite counter does not mean a house is not complete !!
AND the appraiser discloses the counter substitution,, so there are no lies there either . Appraiser can provide estimate of cost to cure and impact on value. What the lender does after that is up to them.

Imo it sounds confused as to what is happening - if you note the house is not complete, and then lender sends you back out for completion, after counter is installed that does not sound like the house closed with an escrow hold back. Is the house vacant, or occupied when you go back for the final after counter is installed ?

PS if a missing item is not a safety or security item, a house can close without flooring finish, without sod, with a low quality counter etc. It can impact value of course, but there is no rule saying a house must have those items to close. s

1004d isn't asking if the house is complete, its asking if the conditions of the report have been met. If your report was based on granite counters then it is "NO" and you can explain.

PS the lender can do what they want, just report accurately.

If the lender holds it up after you explain the situation it is not your fault.

 

[TerryRohrer]

if a missing item is not a safety or security item, a house can close without flooring finish, without sod, with a low quality counter etc.

Part of the 98% rule, I suppose?

 

[Mark K]

Nobody is lying !!

If they say its complete per the original appraisal, yes they are LYING. This should not be difficult to understand, but apparently, the concept continues to elude some.

PS if a missing item is not a safety or security item, a house can close without flooring finish, without sod, with a low quality counter etc. It can impact value of course, but there is no rule saying a house must have those items to close. s

Of course they can close if they chose to close on an incomplete house; that's their call. And some lenders that keep loans in-house will close, no doubt, I've seen it a lot of times.

BUT, they close knowing that the house is incomplete because an ethical appraiser informed them that it was incomplete. Not based on some BS lie that its complete due to an appraiser that doesn't want to rock the boat.

Most appraisals for new construction have something that says...'subject to completion per plans and specs." And a final inspection report that says.."complete per the appraisal report." If the plans and specs indicate quartz or granite counter tops and a cheap piece of plywood is installed while awaiting COMPLETION, the subject is not complete per the appraisal. Twist it however you want to rationalize lying on the final inspection form. Or better yet, write up your own final inspection form that says 'its mostly done, close enough' and turn it in.

 

[Jayjay25]

I could see it if it were a change order and they were altering the original specs. That would require changing the original appraisal and the appraiser should be compensated for the additional work. Most of the time it’s all about wanting something from the appraiser for free (no additional inspection fees or report alteration fees). I ask for free stuff all the time. Most of the time the answer is a big NO.

 

[J Grant]

B4-1.2-05, Requirements for Verifying Completion and Postponed Improvements (03/01/2023)

selling-guide.fanniemae.com

I found the relevant section on Fannie Mae - ( posponed completion ). Sorry it is not 98% complete - the Fannie guideline says the postponed item can not be more than 10% of the appraised value.

 

[George Hatch]

Elaborating on the terms being used will be more informative.

Certificate of occupancy doesn't necessarily mean "complete per specifications".

 

[TerryRohrer]

I believe Fannie et al considers a home complete it it is 98% finished ? They recognize a few miscellaneous items might not be finished but the house is complete as to it is finished for habitable and ready to be lived in.

I found the relevant section on Fannie Mae - ( posponed completion ). Sorry it is not 98%, their guideline says the postponed item can not be more than 10% of the appraised value.

Did you read your reference before posting it? In the post you were called on, you indicated that FNMA, el al, allowed the appraiser to ignore incomplete items if the home was 98% complete. In the reference you posted, it says that:
-The cost of completing improvements must not represent more than 10% of the “as completed” appraised value of the property.
-the postponed improvements must be completed within 180 days of the date of the mortgage note.
-A certification of completion must be obtained to verify the work was completed and must:

• be completed by the appraiser,
• state that the improvements were completed in accordance with the requirements and conditions in the original appraisal report, and
• be accompanied by photographs of the completed improvements.

That hardly makes your case. This is quite like the lies and misinformation you are fomenting about on other threads. And the OP inquired about an FHA loan. How do FNMA regulations control situations where there is no FNMA funding involved?