When appraising a new construction....

[m.ratte26]

When you are appraising a new construction - how far into the process do you wait? Are you looking for 80% completion? 85%? 95%? At what point do you say "Ok, there's enough here I can confidently appraise the property."

 

[Dublin ohio]

What is your client asking for. As is, subject to completion.

 

[Dublin ohio]

"Ok, there's enough here I can confidently appraise the property."

I do them off of plans and specs regularly. Do some on various phases of construction.

 

[Tawfik Ahdab]

Like Dublin said. I’ve even appraised from plans and specs when the lot wasn’t even platted.

 

[m.ratte26]

I'm an appraisal coordinator, so I'm doing the orders for my company. I don't want to send out an order too early and clog up an appraiser's queue - I've had them yell at me for that before, so I'm in no hurry for a repeat performance. I have a particular one that I'm definitely not ordering right now - closing isn't until December - but it got me wondering so I thought I'd check in with the experts and see what appraisers generally prefer when it comes to receiving orders for homes that aren't finished.

 

[Dublin ohio]

so I thought I'd check in with the experts and see what appraisers generally prefer when it comes to receiving orders for homes that aren't finished.

Has little to do with what we prefer. It is up to the lender. Most of my new construction is either from plans and specs or under construction. I do them subject to completion. Occasionally I get a new inventory home. But rarely. Most of mine are build to suit.

 

[Mike Ault]

but it got me wondering so I thought I'd check in with the experts and see what appraisers generally prefer when it comes to receiving orders for homes that aren't finished.

I prefer to do them off plans and specs myself. What I hate is for a client to set a closing date when the builder indicates it's going to be done and then turn me into the project coordinator, expecting me to provide biweekly status updates on the builder's progress because with very rare exceptions it's never done on time. Make your borrower or the builder responsible for informing your appraiser when the property is complete and ready for inspection. If you want your appraiser to go out prior to completion so you can get the underwriting started on the file beforehand then tell them so. If you expect them to wait until the property is 100% complete before they inspect the property then tell them that in advance as well. Hard feelings occur when the client is pressuring the appraiser to get the appraisal back so the client can close and when the appraiser rushes out there two days before closing and finds major components are still incomplete, then appraisers are pressured to overlook those items because all of a sudden is "their fault" that the closing has been delayed. Understand that everyone's expectations for what they consider complete "varies" and pass "your expectations" onto the appraiser in advance. If the contract price or contractor specifications includes items like fence, sod & sprinkler system however they were delayed due to inclement weather expect to escrow for those items (even though the property is 100% livable) unless you have discussed that situation with your appraiser in advance. I'm sure I'll think of something else that's always been contentious soon. Thank you for inquiring about our concerns on here though & I'm sure your appraisers will be happy that you did!

 

[TJSum]

Usually the lenders have a time table on new construction they work off of. Typically they order the reports when the property is 1-2 months from completion.

 

[shrubberyvaluation]

When you are appraising a new construction - how far into the process do you wait? Are you looking for 80% completion? 85%? 95%? At what point do you say "Ok, there's enough here I can confidently appraise the property."

Depends what my client wants.

 

[m.ratte26]

Unfortunately we don't have any time table, which is why I was asking what was kind of the "general rule of thumb" that everyone goes by. I was thinking a month out, myself, but wasn't sure if that was too far out of skew.

So here is my thought process, and y'all can tell me if this would be an acceptable approach:

Discuss with the LO/processor if we need the appraisal done prior to completion for the sake of underwriting (to have it done subject to completion) and if so at what point UW wants that to be completed - which we will then require the builder and/or borrower to inform us of, when the construction reaches that point. At that time, I would be able to order the appraisal, whatever the required completion point is. This would ensure we aren't ordering too soon, and that we have all expectations in hand for the appraiser when the order is made - wasting no one's time.

My lender is starting a new pilot program where we ditch AMCs and order directly with the appraisers, so the working relationship with my appraisers is of utmost importance to me. I'm very dedicated to creating a strong partnership with everyone we work with, but I've just started so I don't have the rapport with them yet to reach out individually and ask them "Hey, how do you wanna do this?" So all the input I receive here on these forums is very much appreciated!!