New construction appraisal - no escrow set based on certificate of completion

[in1268]

I'm hoping someone with some good experience in this area can offer us some advice on a problem we had with an appraisal on our new home.

In short, our home was issued a certificate of completion in December despite the fact that we still had bare wood and shingles, primer only on some of the wood and we had no irrigation system put in nor any landscaping at all. Pictures taken with the appraisal report show the bare wood and it's evident that beneath a shallow layer of snow there is no landscaping (there wasn't enough snow to cover shrubs or trees and you can see dirt in some areas so it's completely apparent that there's nothing there).

So, based on the cert. of completion the mortgage company did not set up an escrow holdback to complete the painting, irrigation and landscaping.

I understand that a home can be deemed complete if it's 90% done but I thought I read that notes needed to (or should) be included in the report indicating what is outstanding. All of our documents from the builder indicate that we were to receive irrigation and landscaping and we were presented with a letter from the builder at closing that states that paint, irrigation and landscaping WERE put into escrow.

The appraisers office said something to the effect that they wouldn't be held responsible for not knowing that the landscaping wasn't there. Is it too much to ask that he scuff a bit of snow out of the way to see if sod had been put in? What about the fact that it's totally obvious that there are no shrubs, trees, etc.? You'd have to have two feet of snow to even cover a small shrub. Wouldn't an experienced appraiser realize that landscaping is generally missing on homes that close in the winter? What about the bare wood he photographed that needed to be painted? Is there an element of common sense and due diligence that we can expect from an appraiser? It seems negligent or lazy (at best) to us that he would not make note of these obvious omissions.

I guess we just need some professional opinions on whether or we have any grounds to pursue the appraiser. We have an attorney who contacted the appraisers office and they told us we had to look at what our purchase agreement and/or lending documents say about escrow. That seems to me like they're passing the buck when the appraisers report is WHAT the lender uses to establish an escrow holdback.

I hope this makes sense. These omissions are potentially going to cost us $10K and that STINKS because we've already paid the builder for the services that are outstanding. I should also mention that the builder has since gone out of business. Nice!

ANY information, advice or suggestions you can give would be appreciated. THANK YOU for even taking the time to read this.

 

[AnonApprsr]

In short, our home was issued a certificate of completion in December despite the fact that we still had bare wood and shingles, primer only on some of the wood and we had no irrigation system put in nor any landscaping at all. Pictures taken with the appraisal report show the bare wood and it's evident that beneath a shallow layer of snow there is no landscaping (there wasn't enough snow to cover shrubs or trees and you can see dirt in some areas so it's completely apparent that there's nothing there).

Those may not have affected the appraised value, may not have been included in the plans and specs. Just because an appraiser says it's complete doesn't mean the builder can screw you over. The appraiser works for the lender, if the lender has paid the builder for these items (and you have documentation) than those items need to be installed.

 

[Deleted member 77547]

We likely cannot give you a definitive answer since we don't know what kind of an appraisal you're looking at - or if a "final inspection" was done by the appraiser - or if the lender went ahead and closed the loan without a final inspection. I have done construction loans w/draw inspections and then one day I get a call 6 months after the people closed and moved in to go do the final inspection because it was never requested by the lender and the underwriter went ahead and let it close without one.

The appraiser simply makes a suggested holdback, the underwriter decides if its necessary. However, if the appraiser just rubber stamped the FINAL INSPECTION as complete when it was, in fact, not complete, then that's another issue.

If nothing else, this is a cautionary tale for those doing construction inspections...never sign off unless its 110% complete because you'll all be chasing the contractor through bankruptcy court.

 

[Noreen]

Good Evening; I would not know what the typical procedure is in your area of Indiana but I am is So NH, 40 minutes north of Boston so believe me, we have serious winter weather here as well. I can only speak to the business practice in my "Winter Area" so here goes. When I have a final to do in "Winter Weather (Nov 1 through May 1 of any given year) my lenders typically set the tone as to what they want. Most want everything that was in the Purchase & Sales Agreement ( what you paid for with that house) to have been completed at time of closing. They typically escrow 1.5 times the "cost to cure" incomplete items" (in my area) It is very common in this area that the loam, raking and seeding is not done ( no one in the structure before closing to water the lawn), once the temp goes below 35 degrees, no exterior painting is done ( paint rolls off the wood the same way peanut butter will roll off bread if applied a certain way) the irrigation system would typically go in at the same time that they are preparing the lawn for the top dressing ( i.e. sod, rake hay & seed ). I mention everything that remains to be completed at a later date to "Due to adverse New England Winter weather conditions") I get my estimates from different sources and apply the most practical estimate based on the area involved. ( i.e. a 60' driveway versus a 200' driveway). I would ask who was your lender? I would contact whomever processed your loan and ask them what they require in your area. There are some loan programs that do not require an escrow if the cost to cure is less than 3% of the appraiser value of the land and improvements. I would start with your bank/lender, I would also check to see if the builder is still around and if they will not make good on the contract you signed that they have already paid for at closing, you could take them to court. (small claims in your state/area?) I would start with your bank. I would not assume anything when it comes to the instructions to the appraiser. The bank will tell you if they instructed them to just sign off on the habitability of the home. Keep us posted, I wish you all the best.

 

[Happy Val]

My advise is to look at te original appraisal. Was it subject to landscaping? Just because you and the builder agreed to include landscaping, the appraisal may have been based on no landscaping. I've done some appraisals where the builder was to install AC, but for the appraisal, it was valued without. As for the bare shingles and primer, are they cedar? Does the primer look like the final coat? It may have not been evident to the appraiser that the final coat had not been applied and the shingles wer supposed to be bare. Im in the NW and we have bare shingle (cedar) siding everywhere. Of course, if the shingles and paint were obviously not completed, then, yeah, he/she likely missed a step. Appraisals are for the lender, not the buyer's best interests. When we give a final cert., it does not necessarily check for all that the borrower and builder have agreed to. Hope that helps.

 

[Mr Rex]

What does your contract with the builder say? I suggest your remedy is found there, not in the appraisal.

 

[hastalavista]

There are two likely ways your appraisal was completed (I'm going to use a bit of appraiser shorthand here):

A. As-is.
As-is means what it says. In the property's as-is condition as of the date of the valuation. If your house was habitable (it could be occupied; and that is typically what the certificate of occupancy means), then the appraisal, as-is, should value your property in its condition, as-it-was.
Unfinished flooring may or may not have a significant impact on the value; ditto for the lack of landscaping/shrubbery.
Look at the appraisal (bottom of page two) and see if the "as is" box is checked. Then, read the appraisal to see if there is any mention of what you think was unfinished at the time.

What is critical here is this: Did the appraisal credibly value the property in its as-is condition?

B. Subject-to.
This means the appraisal will value the property as-if something is done, subject-to that thing being done.
In other words, I appraise your house and you are in the middle of replacing the windows. I may value your house as-if the windows were replaced, subject-to the windows actually being replaced. The appraisal assumes that the windows are replaced, and values it as such; but the valuation is contingent on the windows actually being replaced. If they are not, the conditions of the valuation are not met (and the value is not meaningful).

Your appraisal may have been made "subject to" completion of the floor being refinished and/or the landscaping being completed. If that is the case, and they were never finished (and assuming there is no certification of those items being finished by an appraiser afterward), then your issue is not with the appraiser (and probably not with the lender). It is with the builder who went out of business.

Look at the bottom of page two and see if the "subject to" box is checked. If that is the case, I don't think you have an issue with the appraiser/appraisal report.

Let us know which way the report was completed (as-is or subject-to) and if "as-is", let us know if the appraisal report described what was not finished or made any comment on how what was unfinished was considered in the valuation analysis.

Good luck!

 

[Terrel L. Shields]

Wouldn't an experienced appraiser realize that landscaping is generally missing on homes that close in the winter?

It is not necessarily typical to put much allowance for "landscaping"...assuming you mean trees, etc. If not in the original plans and specs it does not get put in by conjecture. We get provide a P & S and we appraise that...everything else is someone elses problem. I've had many appraisals where there was no allowance for landscaping or even sidewalks...not my problem.. The bare wood? I donno. again what and where is the 'bare wood' -

 

[in1268]

Please see last post.

 

[in1268]

Please see last reply/post.