New Construction

[Bailey1427]

I received an order from a new client that I have not done any reports for yet. They are asking for a 1004-SFR. After speaking with the homeowner to schedule a time, I learned there actually isn't a house on the property. The existing home has been torn down and they are planning to build new. They are having trouble getting an appraisal done for their loan. He already had one appraiser call who sounded just as confused as I was. The client provided plans/specs for the new build. I have not performed an appraisal like this before. Do I proceed with an extraordinary assumption that there is a house there? There are some buildings on the property and a pond. I guess I'm just not sure what the lender is wanting, current value or what it would be with the future home. The instructions say sales comparison approach included in report and cost approach included in delivery. I find this very confusing. Any experienced advice is appreciated. Thanks!

 

[glenn walker]

Personally no offence but your not qualifed and it's not good using the borrower or the client as your first surgery. Too much liability.

 

[Overimprovement]

I concur with Glenn--the questions you are asking lead me to believe you should either respectfully decline, or seek a local appraiser's professional assistance. Your questions cannot be adequately addressed in a forum.

 

[Bailey1427]

I appreciate the input. I declined.

 

[Terrel L. Shields]

Do I proceed with an extraordinary assumption that there is a house there?

I am sorry the others are so negative. But no, it is not an extraordinary assumption. It is a hypothetical - contrary to what exists.

The report is subject to completion.

Using the plans and specs you can compare it to new houses. Newer construction, to me, means the cost approach on every assignment. I do it religiously. And buy a cost book (Craftsman are cheap and have a computer program built in) Use the cost approach and the owners estimates to compare value the improvements. Use and know what EP is (Entrepreneural profit) Use vacant lot sales to value the site value. Estimate the amount of time it should take to build in the comments. Use new sales, as new as you can find, for comps. No income approach.

I appreciate the input. I declined.

you will never learn to value new construction by declining. Get some help and even if you give them the entire fee, you can learn from someone else with more experience.

 

[Dublin ohio]

you will never learn to value new construction by declining. Get some help and even if you give them the entire fee, you can learn from someone else with more experience.

I was a little confused over the easy decision to decline after a few negative comments. I winder if the OP is just used to subdivision new construction or has just not doen any new construction. The only wrinle to this one is there are already some other existing improvement present. A little more complicated but not really that much

 

[Surf Cat]

you will never learn to value new construction by declining. Get some help and even if you give them the entire fee, you can learn from someone else with more experience.

I agree with ^^^ this OP. You should always keep in contact with your former mentor, and or Associates that you worked with for this very reason.

Subject to plans and specs are awesome assignments.

 

[glenn walker]

I agree with ^^^ this OP. You should always keep in contact with your former mentor, and or Associates that you worked with for this very reason.

Subject to plans and specs are awesome assignments.

Depending on what those Plans and Specs are for ? that's the big question
were the conversation should always begin before quoting a fee or accepting the assignment.

 

[alebrewer]

It's a conundrum. You never learn niche properties if you decline, but if you're not qualified you can't take them on (at least not for GSE work). Prolly not a bad idea to decline this one - as you had no idea how to complete it, but the next time a plans and specs comes along, you'll have a better foundation for attacking the problem.

 

[Surf Cat]

Depending on what those Plans and Specs are for ? that's the big question
were the conversation should always begin before quoting a fee or accepting the assignment.

That's on the scum of the earth AMC.... no slight on the op, we've all been there.

LBut the audacity for finding the cheapest, fastest hand raiser without so much of an explanation of the particulars of the assignment....so they could rake in the most cash on the deal is insulting to the borrower who wants to build a house and needs a loan..... and this is the second time!

The borrower needs an experienced, geographically competent appraiser to pull this off. The borrower should drop this lender like a bad habit and move on to a lender who cares about their clients.
Mother F-ing Fk Faces....