Northeast Missouri Appraisal

[ljr3434]

I believe I posted this in the wrong spot the first time. Yes, I know the basement appraisal is talked about on here a lot. From everything I have read I know that my sqft and bedrooms will not count on the appraisal as above grade value. My situation is this. We started the building process back in March, had the blueprints done, taken to the bank and got approved and all that good stuff. The house we are/were building is a 1806 sqft 1 bedroom and 1.5 bath on main floor then 2 bedrooms 2 bathrooms and 1750 finished sqft in the walkout basement. I told my banker I had heard that below grade sqft and bedrooms will not count in the appraisal to which she reassured me, via email, they would and it would work out because she has had many houses that had the bedrooms count that were in the basement as long as they had the egressed windows. Also my loan officer told me if I wanted to I could go ahead and start the groundwork and basement so I could get a jump start and that they would just reimburse me when we closed. So now I already spent 12k of my saving and depleted most of my savings. Well after months of problem after problem with this bank it finally got to the appraiser. The appraiser called me and told me I needed to get him my blue prints in PDF format, which I did. He then had me go out and take pictures of the property, which I did. About 30 min after I emailed him the blueprints and the property pics he called me and said we have a big issue. You have a 1 bedroom, 1.5 bathroom 1800 sqft house. I told him I was told that with the walkout having windows in the bedrooms they would count. He said no and that he could only give me $8/sqft for the finished basement. I asked him since it was on 8 acres if that would help, he said not really and that he would be pushing it to get it to appraise at $250k and he would not be able to find any comps. I can not build this house for that much. He also said I could call other appraisers but he was a general, and that's as high as it goes and he knows what he is doing. I guess I would just like some other people opinions on this situation if its not to much to ask. It kind of turned my life upside down. The person that designed the house, my contractor, the loan officer, none of them knew this would happen. They all seem as confused as me until I started doing more research after the fact. I guess I just trusted my loan officer because she deals with giving money for houses every day and said it would be fine and appraise way more than I needed and with my property I would be below 80% and not need PMI. Thanks for any advice and experience shared its appreciated.

 

[Michigan CG]

..................to which she reassured me, via email, they would and it would work out because she has had many houses that had the bedrooms count that were in the basement as long as they had the egressed windows. Also my loan officer told me if I wanted to I could go ahead and start the groundwork and basement so I could get a jump start and that they would just reimburse me when we closed...........

Your loan officer is an idiot who most likely works on commission.

 

[ucbruin]

Your loan officer is an idiot who most likely works on commission.

I guess the LO is not getting a commission on this one!!!!

 

[Joe Flacco]

I used to do a lot of proposed construction and almost all builders talk about structure size in terms of gross building area (GBA) which includes basement. Actually, I think many if not most market participants think about structure size in terms of GBA. The breaking out of above grade and below grade really comes from back in the day when basement space was generally inferior to above grade levels. In new construction these days, basement space is almost just as good as above grade space especially when it is walk out level or with many full size windows.

If you are building a one level 1800 SF home with 1800 SF walk out basement and the typical new construction in your neighborhood is 2400 SF on two above grade levels with 1200 SF in the basement, those are actually both 3600 SF GBA homes. It is just that the style of the homes are different.

That comment about $8 per SF for finished basement on new construction sounds to me like your general appraiser is a dummy. I would push the bank to pay for a new appraisal.

 

[Terrel L. Shields]

He said no and that he could only give me $8/sqft for the finished basement.

Turn him into the state. He is an idiot.

 

[Artemis Fowl]

So sorry but allow me to summarize: You are working with idiots.

 

[Deleted member 130081]

So, your appraiser is working from a form mentality, not a market perception mentality. This is the approach I would take when discrediting the appraiser, not paying them a dime, and getting a new one. I say this because often in lending, you simply can't keep going around to appraisers until you find one that suits your value (laws and stuff). Your home design was not common until more recently, and it's not exactly common now, but you see it often enough where any appraiser ought to recognize it. I am going to guess you are building on a slope, and much of the basement is exposed, not just a small part for a walk-out door. I would guess when you look at the house from the rear, it looks like a 2-story house. I will also guess, that the finished basement is built to the same quality of finish as the upstairs. Have I guessed right so far?

Your market will likely look at this house as a 2-story. No, its not a traditional 2-story, but it really serves like one, minus the basement. In MO, I'm going to guess some homes have basements and some don't, and if challenged with this appraisal, I would try to find 2-story homes without basements as the best comparisons, if I could not find homes exactly like yours. If I had to, I would use any home remotely comparable. Also, because your home is new, the Cost Approach to value is going to be relevant, so simply not finding comps is not the end of the world.

Here's the thing, when appraisers say they have no comps, that's because the lenders are such sticklers about perfect comps, not because comps don't exist. I'm not trying to stick up for the guy, but that's where the sentiment comes from.

Last and not least, hopefully your lender is aware of all these issues and despite your home not being a cookie cutter, meaning the subsequent appraisal will not be all neat and wrapped up with a bow, they will still lend you the money, after they said they would and you have come this far.

Good Luck.

 

[ljr3434]

So, your appraiser is working from a form mentality, not a market perception mentality. This is the approach I would take when discrediting the appraiser, not paying them a dime, and getting a new one. I say this because often in lending, you simply can't keep going around to appraisers until you find one that suits your value (laws and stuff). Your home design was not common until more recently, and it's not exactly common now, but you see it often enough where any appraiser ought to recognize it. I am going to guess you are building on a slope, and much of the basement is exposed, not just a small part for a walk-out door. I would guess when you look at the house from the rear, it looks like a 2-story house. I will also guess, that the finished basement is built to the same quality of finish as the upstairs. Have I guessed right so far?

Your market will likely look at this house as a 2-story. No, its not a traditional 2-story, but it really serves like one, minus the basement. In MO, I'm going to guess some homes have basements and some don't, and if challenged with this appraisal, I would try to find 2-story homes without basements as the best comparisons, if I could not find homes exactly like yours. If I had to, I would use any home remotely comparable. Also, because your home is new, the Cost Approach to value is going to be relevant, so simply not finding comps is not the end of the world.

Here's the thing, when appraisers say they have no comps, that's because the lenders are such sticklers about perfect comps, not because comps don't exist. I'm not trying to stick up for the guy, but that's where the sentiment comes from.

Last and not least, hopefully your lender is aware of all these issues and despite your home not being a cookie cutter, meaning the subsequent appraisal will not be all neat and wrapped up with a bow, they will still lend you the money, after they said they would and you have come this far.

Good Luck.

Yes you were correct in all that you said. Slope, the whole back and partial of the basement side are exposed, and it will be finished in the same exact quality as the upstairs. It looks like 2 stories from the back also. Thank you for the reply.

 

[Webbed Feet]

I believe I posted this in the wrong spot the first time. Yes, I know the basement appraisal is talked about on here a lot. From everything I have read I know that my sqft and bedrooms will not count on the appraisal as above grade value. My situation is this. We started the building process back in March, had the blueprints done, taken to the bank and got approved and all that good stuff. The house we are/were building is a 1806 sqft 1 bedroom and 1.5 bath on main floor then 2 bedrooms 2 bathrooms and 1750 finished sqft in the walkout basement. I told my banker I had heard that below grade sqft and bedrooms will not count in the appraisal to which she reassured me, via email, they would and it would work out because she has had many houses that had the bedrooms count that were in the basement as long as they had the egressed windows. Also my loan officer told me if I wanted to I could go ahead and start the groundwork and basement so I could get a jump start and that they would just reimburse me when we closed. So now I already spent 12k of my saving and depleted most of my savings. Well after months of problem after problem with this bank it finally got to the appraiser. The appraiser called me and told me I needed to get him my blue prints in PDF format, which I did. He then had me go out and take pictures of the property, which I did. About 30 min after I emailed him the blueprints and the property pics he called me and said we have a big issue. You have a 1 bedroom, 1.5 bathroom 1800 sqft house. I told him I was told that with the walkout having windows in the bedrooms they would count. He said no and that he could only give me $8/sqft for the finished basement. I asked him since it was on 8 acres if that would help, he said not really and that he would be pushing it to get it to appraise at $250k and he would not be able to find any comps. I can not build this house for that much. He also said I could call other appraisers but he was a general, and that's as high as it goes and he knows what he is doing. I guess I would just like some other people opinions on this situation if its not to much to ask. It kind of turned my life upside down. The person that designed the house, my contractor, the loan officer, none of them knew this would happen. They all seem as confused as me until I started doing more research after the fact. I guess I just trusted my loan officer because she deals with giving money for houses every day and said it would be fine and appraise way more than I needed and with my property I would be below 80% and not need PMI. Thanks for any advice and experience shared its appreciated.

I am sorry that I do not have an encouraging response for you. After reading the thread my hope for you is that you have all of these statements made by the loan officer documented and less so by the appraiser. The reason is that though the loan officer seemed very helpful, and the appraiser somewhat so in providing all his lovely opinions to you, the facts are neither of them have a shred of ethics.

Real estate appraisers in most all states of the union are required to follow the Ethics Rule of the Uniform Standard of Professional Appraisal Practice. The odds are the appraiser has violated at least half of them already. I'd be surprised to learn his assignment included oral reporting to the borrower and that he had a work file with written report backing any of that up. So as far as this loan officer and appraiser go? Well, birds of a feather they say!

Next, it sounds to me that your next stop should be to an attorney to discuss suing that lender and the loan officer.

Lastly, I cannot fathom why someone would start building a house, without an iron clad loan commitment, on only about $12K of savings. Any real estate professional, in any realm of it, knowing you were that underfunded and telling you to go ahead without loan commitments should be summarily drummed out of the real estate industry.

 

[Carlos Danger]

Since he's got you doing all his field work just ask him to mail the form so you can fill it out yourself.