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VA New Construction

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CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
Well I have a big name new construction tract lender/builder insisting they want the report changed from 'subject to repair' of 'installation of customer preference items including appliances, flooring, and interior/exterior finish items' to 'subject to completion per plans and specs'. As I told them, the home was built when I saw it. They did not give me plans and specs and I did not request plans and specs and I did not rely on plans and specs in the development of my appraisal. I think it would be kind of misleading to change the report at this point to say it is based on the hypothetical condition that the plans and specs home is now complete.

And as I was looking at the Plans and Specs they emailed the document is not really the plans and specs for this home on this lot they are a generic plans and specs for this model on a typical lot in this subdivision. I've always been of the opinion that the Plans and Specs refer to the actual blueprints for the actual structure. These plans include all the little variables like Elevation A, B and C and optional guest suite or study or whatever. These plans have the garage right when the subject has garage left. I know the guys with the hard hats and hammers did not work with these plans and flip everything around while they were building it.

Any idea why they are being so stubborn? Are generic plans and specs really plans and specs? Any idea how VA feels about this?
 

Confident Rabbit

Senior Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Washington
Look at field 9 on your 1805. If the building status is anything other than "proposed," then you've handled it correctly (in my opinion). Proposed cases require a specific set of plans, including the plot plan. Required construction exhibits are in 10.10 of the lender handbook. My understanding is there are different builder warranty requirements based on how the property is appraised (existing, new const, proposed, etc), so that may be the reason for the change request.

If it were me, if I didn't appraise from plans and specs, I'm sure as heck not going to make the appraisal subject to completion per plans and specs.

I hope this helps. VA new construction can be a pain sometimes... at times it seems some lenders don't know how to follow the VA rules. Or don't want to.

Good luck!
 
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GA Benny

Junior Member
Joined
Oct 19, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
If it is at the customer preference stage, you did it correct by making it subject to repairs and listing the remaining items.

As for the plans, I will accept the generic set as long as it is clear in the contract or specs which options, elevations and configurations are planned to be completed. The intent is to protect the Veteran by ensuring that the Veteran and the builder are both on the same page as to what the house will look like at completion, which is why they also must be signed by both parties, and to ensure that your value accurately reflects what will be built.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
If it is at the customer preference stage, you did it correct by making it subject to repairs and listing the remaining items.

As for the plans, I will accept the generic set as long as it is clear in the contract or specs which options, elevations and configurations are planned to be completed. The intent is to protect the Veteran by ensuring that the Veteran and the builder are both on the same page as to what the house will look like at completion, which is why they also must be signed by both parties, and to ensure that your value accurately reflects what will be built.

Both replys are correct. Builders do not dictate how you do an appraisal and what you put in your report. The VA is very clear as to what is required when doing an appraisal by plans and specs. You as well as the 2 posters are correct.
 

A Brit in California

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Joined
May 6, 2006
Professional Status
Certified Residential Appraiser
State
California
I complete several of these each week and always use "subject to completion". I estimate the progress of completion in a range, something like "the subject home appeared to be 70% to 80% complete at the time of inspection". I mark the box "under construction". "Proposed" is the box I use when there is a vacant lot and I prepare the report from plans and specs and/or use a model home. Confused as to why it would be done "subject to repair".
 

GA Benny

Junior Member
Joined
Oct 19, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
I complete several of these each week and always use "subject to completion". I estimate the progress of completion in a range, something like "the subject home appeared to be 70% to 80% complete at the time of inspection". I mark the box "under construction". "Proposed" is the box I use when there is a vacant lot and I prepare the report from plans and specs and/or use a model home. Confused as to why it would be done "subject to repair".
If it is defined as "new construction" meaning that it is complete or complete with the exception of buyer preference items (floor coverings, paint, appliances, etc...punch out list stuff) then you will make the report subject to repair and list the remaining items. This eliminates the requirement for the construction exhibits to be included. See Chapter 10, section 8 in the lender's handbook.

For proposed and under construction, the construction exhibits must be reviewed and included in the appraisal or uploaded with the contract.
 

GA Benny

Junior Member
Joined
Oct 19, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
I should also add that you only do a final if it is subject to repairs. If it is subject to plans and specs, the lender is supposed to use the Certificate of Occupancy as the final.
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
I complete several of these each week and always use "subject to completion". I estimate the progress of completion in a range, something like "the subject home appeared to be 70% to 80% complete at the time of inspection". I mark the box "under construction". "Proposed" is the box I use when there is a vacant lot and I prepare the report from plans and specs and/or use a model home. Confused as to why it would be done "subject to repair".
Because when you check 'subject to completion per plans and specs' VA requires that you include all those plans and specs in the appraisal report.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
If it is defined as "new construction" meaning that it is complete or complete with the exception of buyer preference items (floor coverings, paint, appliances, etc...punch out list stuff) then you will make the report subject to repair and list the remaining items. This eliminates the requirement for the construction exhibits to be included. See Chapter 10, section 8 in the lender's handbook.

For proposed and under construction, the construction exhibits must be reviewed and included in the appraisal or uploaded with the contract.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
That is correct. "Subject to completion" is only used if it is by plans and specs.
 
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