Premium For New Construction?

[Riick]

I recently did an appraisal for new construction, first one for me in *many* years.
I found it's difficult to impossible to find comps in our MLS, so I had to haunt the sales offices
of competing developments & beg for HUD-1s. Then there was rationalizing the upgrades;
one developer charged $7,500 for a 550 sq.ft. finished basement, while another priced
similar size (& finish) finished basement at $24,000. Cost isn't market value, but with that kind
of spread, you've got a riddle that requires more research.
Bottom line, since I spent a lot of extra time on this one, anyone charging a premium fee for new construction?

 

[LordofTexas]

I can't justify any extra fee it in my area (urban to rural of course with an abundance of vacant land). My dilema is showing how minimal a value difference there is between a 1 or 2 year old home in the same newer development compared to a new home. There have been numerous times when I found it hard to justify an adjustment between a C1 and a C2.

 

[Sid Holderly]

When I was a trainee I was doing more work in a larger city. The one year old sales were selling higher than the new construction in the same subdivision
(Same home models and sizes). The only reason I could see was that the yards were undeveloped (or just seeded with little greenery) while the one year old
homes had nice green yards flowers and shrubbery. There was not a large amount of difference but it was easy to spot with the number transactions present.

 

[Sid Holderly]

But, back to the subject. new construction fees are above a refinance fee but below an REO appraisal fee. All will vary per subject location and amenities.

 

[Deleted member 128537]

I do a fair amount of new contruction. It's tough to isolate the differences, and it clearly depends upon the neighborhood. For example in my area landscaping is no big deal since I live in an area with second homes and people want to keep it a little wild so they don't have to maintain it. That would be different in suburbs. The only way to really get the number is look for builders that sell new homes through MLS. If you don't have that it's a problem. My experience the premium is about what the physical depreciation would be between a new and 5 year old (effective age) home. That comes with the caveat the home isn't over built for the site; which happens a lot in my area. Then it's a bit dicier. But when you get into a newer home that's only a few years that's a bigger problem. Very hard to isolate that because most homes are lived in at least 5 to 10 years before being resold.

 

[Amy Perkins]

A new home with a basement; we don't have these in CA. In fact, we have very few basements.

 

[Amy Perkins]

Maybe some have windows and are less creepy.

 

[Blueprint]

Charge the premium you deserve for the work involved as long as it does not cost you a good client. Half of my portfolio right now is pre new construction for local tract home builders and there is no need to increase. The other half involves random new construction in gated golf course communities where new construction is rare. No doubt I will charge a premium comparing new construction in these situations.

Point is simple, charge a premium fee if it works for you and your situation. If it don't, then don't. New construction is on the rise, so expect more activity in the future.

 

[Mike Garrett RAA]

If you are doing the appraisal from plans and specs a higher fee is usually warranted; however, since most of my work is VA, I can't charge more.

 

[Joe Flacco]

About 1/3 of my assignments are for infill construction or expansion/renovation. I quote the same fee I would quote for purchase/refinance assignment for upper bracket property. About 1.75 to 3 x base fee.