Consumption and Real Estate
How can a home’s appraised value change so much in four months?
Question : How can a home’s appraised value change so much in four months?
We built our house on our acre lot through one of the owner / builder companies so that we could save money. When we started the process to get our construction loan, we were told the value of the house that we were going to build would be somewhere around $ 310K upon completion. We were approved for our construction loan and built the house for around $ 245K.
We closed into our permanent mortgage loan at the beginning of Jan. 2009. The appraisal was somewhere around $ 320K, and we were financing around $ 245K, so we were good to go.
Our broker called us after we made our 3rd payment and said that the rates had dropped significantly and that we should refinance so we can get a better rate. He submitted the paperwork to the same bank we are financed through and we had to pay for another appraisal. A different appraiser came out around the middle of May and appraised it at $ 226K. On the appraisal it says that property values have not significantly changed in our area, so why is their appraisal almost a $ 100K less than the appraisal that was done a few months ago? Our broker is working on this and contesting it, but it just doesn’t make sense to me.
For acermill: We built the house on our acre lot that we owned. We didn’t pay a builder. We chose the sub-contractors we wanted and cut out the middle man most of the time. Some of the work was done by my husband and family members. We saved a lot of money this way. So it would only make sense that the appraisal would be more than what we paid to build the house. The house was estimated to value $ 310K before we even started.
owner builder construction loans
Best answer:
Answer by JJ
your appraiser gets you appraised value from other homes that have sold or are on the market in that area recently. Because the market is so low people are getting less for there house than they could before. Its a buyers market. Therefore homes owners that are selling homes comparable to yours are taking less for it so they can get rid of it and them doing it is driving down the price of your home. It will come back up but will take some time
ex- home comparable to yours has recently sold for about 250k just so owners can get rid of it because of loss of work, economy etc. When the appraiser pulls your comps to get your appraised value these homes come up and thats how he gets your value
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#2 written by acermill 1 year ago
Rather than question THIS appraisal, perhaps you should be questioning the appraisal which valued you at $ 80,000 over the cost of the construction. THAT should raise a question in your mind.
It is not common to develop $ 80,000 worth of equity in a new construction project. I’m guessing that your FIRST appraisal was inflated.
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When was the appraisal ordered and do you know if it was done through an AMC? Chances are your broker had to order the appraisal through the lenders HVCC approved appraisal management company which means he couldn’t use the same appraiser as before. You will see more horror stories like this as time goes by. What this means for you is that you probably got an inexperienced appraiser who is either very new or not familiar with your area. The reason being is that the AMC will charge say $ 450 for the appraisal and then turn around and pay a local appraiser $ 275. Most experienced appraisers are not willing to take this kind of pay cut which is why you end up with a newbie.