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New construction inflated appraisal

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GrandmaK

Thread Starter
Freshman Member
Joined
Dec 8, 2007
Professional Status
Real Estate Agent or Broker
State
North Carolina
I am a realtor and I have a client getting ready to close on a new construction home. They are using the mortgage company that is owned by the national home building company. I am trying to prevent my client from purchasing a home that is not valued correctly. The appraisal has come in using comps of homes in the neighborhood but are built by another builder (more upscale than my clients track builder). These comps are more than six months old and there have been at least a dozen homes close in the last six months for the track builder but were not used per the appraiser due to the fact that the my client has more upgrades than any other home that the appraiser has chosen to use. After some research I have been able to ascertain that there were other comps with many upgrades that could have been used but were not. We have ordered an independent appraisal and should have it by Monday. I have spoken to several appraisers in the area and they seem to think that the appraiser may be selecting properties to get the value of the house for the purchase price at the time of contract back in June. Please advise what we should do. I don't want them having negative equity because someone may be trying to hold on to a national company's business.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
"They are using the mortgage company that is owned by the national home building company. "

IMHO that is a major mistake. I know many times they give huge incentives to use their own mortgage company, but in the long run those free incentives are not "free". I got "fired" by every builder's lender I tried to work with because of the things they demand for an appraiser to overlook and do. Try to use an independent mortgage company who will look out for your buyer (yes there are honest mortage lenders) instead of the builder.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
I think you will do well to obtain your own, independent, appraisal by an appraiser who is familiar with the neighborhood and has experience appraising for more than 4 years.

If there is a significant difference in the two value opinions, you will have to work out something with the builder.
 

Sylvia Setash

Freshman Member
Joined
Jul 4, 2005
Professional Status
Banking/Mortgage Industry
State
Virginia
Hi GrandmaK, your profile will not permit me to email you or send a private message. I am a mortgage loan officer that has just experienced this situation.

If you like, please contact me via this site.
 

Sylvia Setash

Freshman Member
Joined
Jul 4, 2005
Professional Status
Banking/Mortgage Industry
State
Virginia
No delete key? Trying to clean up the duplicate.
 
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hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Please advise what we should do. I don't want them having negative equity because someone may be trying to hold on to a national company's business.

Sounds like you don't need our advice- your concerns are legitimate, your research into the issue (past sales in subject tract) was diligent, your action (new appraisal) is appropriate and your motivation (protecting your client) is commendable. You are certainly doing what I'd advise! :new_smile-l:

We tend to hear only the bad stories regarding real estate professionals on this forum. Yours, while I hope not uncommon, is refreshing nonetheless.

Good luck and please let us know how this turns out!
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
I don't know how long ago the first appraisal was done, but generally speaking, to not use comps from the subject tract is completely ridiculous, no matter how many upgrades the subject has.

If you determine that the current value is less than the sale price, then you'll have your work cut out for you. :new_snipersmilie:
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I am a realtor and I have a client getting ready to close on a new construction home. They are using the mortgage company that is owned by the national home building company. I am trying to prevent my client from purchasing a home that is not valued correctly. The appraisal has come in using comps of homes in the neighborhood but are built by another builder (more upscale than my clients track builder). These comps are more than six months old and there have been at least a dozen homes close in the last six months for the track builder but were not used per the appraiser due to the fact that the my client has more upgrades than any other home that the appraiser has chosen to use. After some research I have been able to ascertain that there were other comps with many upgrades that could have been used but were not. We have ordered an independent appraisal and should have it by Monday. I have spoken to several appraisers in the area and they seem to think that the appraiser may be selecting properties to get the value of the house for the purchase price at the time of contract back in June. Please advise what we should do. I don't want them having negative equity because someone may be trying to hold on to a national company's business.
Please contact me personally!!!!!

email: pec514 @ yahoo. com (remove the spaces)
 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
Randolph stated...

I think you will do well to obtain your own, independent, appraisal by an appraiser who is familiar with the neighborhood and has experience appraising for more than 4 years.

That four years experience is a bunch of crap... who typically is doing the builder's work... it's typically not an appraiser with under four years of experience... have you ever tried getting on a project as a preferred appraiser with under two years of experience? Good luck!

Being that it's a fairly new subdivision... how much more knowledge of the subdivision and immediate market area would a guy with 10 years experience have over a guy with two years experience?

I won't deny I learn something new everyday... but your statements make a mockery of my license and the amount of time I placed in getting to the point where I am now... some of us "new guys" with under four years of experience have pretty solid educational backgrounds and bring some nice degrees and work ethic/morals to boot.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Dear Grandma,

I beleive the other posters gave good advice. But I would like to see you go the extra mile. Often, when confronted with two appraisals of drastically different outcomes, the result really is only confused people all around. Because often only an appraiser can spot a well drafted and finessed fraudulent piece of work. Telling the difference between the quality and the fraud can be difficult for other people to explain the details.

So yes, get that other appraisal. But don't stop there. Find yourself a grumpy, outspoken, not nice personality ... like... well ... me! LOL ... Hire this person for a technical review of that first appraisal. A person that knows all the tricks, has seen the games played, and just loves to tear such an appraiser a totally new one. But yet at the same time can point out all the things you have already mentioned, and probably many more, in an unbiased and professional way to your client for consideration. And after so doing will not hesitate to follow up with a board complaint to boot. You see, far more than you imagine, our trade really needs to force that kind of appraiser right out of our industry. Any help you and your fellow real estate agents / brokers could give us..... would be greatly appreciated. Gosh, file a few complaints yourself! We could use it. Just be fair about judging the difference between incompetent/fraud and simply not liking the appraisers opinion.

Webbed.
 
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