Good morning Lisa!

Yes, wait until the last possible time to have the appraisal. Trust me, the lender for the builder will tell you when they are ordering it. As far as influence on appraisers, remember, the appraiser WORKS for the lender (not you, even though you pay for their service) and that since they work for the lender that is most likely OWNED by the builder, there is always opportunity for influence...especially since the lender is allowed to select from a panel of apprasiers who THEY have added to their approved list. Now, I am not saying it will be a problem, just one that I've seen more times than once with new construction.

If you want to hire your own appraiser, that may not be a bad idea, but I would suggest waiting to see what the value of the appraisal is from the builder's lender first. You may be satisfied with the number.

As far as comparable properties, since there is still building going on and I'm sure there have been recent new home (even if in the last year) sales in Live Oak, I don't suspect that the appraiser will have difficulty.

Remember, while appraisals are intended to be objective, there is still an element of subjectivity when it comes to the comparables the appraiser chooses and how much weight he/she gives a property when comparing to yours and how much of a $ amount they award to certain "upgrades," views, etc.

Good luck!

LaShawn Norden, PA, REALTOR
Luxury Home Specialist
RE/MAX Central Realty
(321) 377-0157
LaShawn@LaShawnNorden.com

Thank you LaShawn & Bill...there is no deadline for the appraisal and actually the builder recommended waiting until as close til closing as possible. I am going with the builder's lender...LaShawn regarding your comment about the appraisals being different I thought it had to be an independent third party either way and that the days of people influencing appraisals was over - i was at least hoping so :) They have been very open about it and agreed with me that the price may come in lower - do either of you think it's worth selecting my own appraiser? When it's a new home what is the most common way to do an appraisal - off existing home sales or replacement value? The home is being built in Live Oak Reserve in Oviedo. Thanks again for all your time!

-Lisa

Lisa,

I'm happy to hear you have read the contract and that the builder reps are aware of your concerns. Are you financing with the builder's lender or an independent lender? If it's the builder's lender, it's been my experience that appraisals tend to come in at or near contract price, but if it's an independent lender, they will be more likely to appraise at the true value as they take the entire market into consideration.

Without knowing where in Oviedo you are building, I can't give an opinion on the percentage of decline. Again, the appraisal won't be done until the house is finished, which means you'll have to wait until then to find out what the value is at that time.

Please let me know if I can help further!

LaShawn Norden, PA, REALTOR
Accredited Luxury HomesSpecialist
RE/MAX Central Realty
(321) 377-0157

Lisa,
The terms of your contract may specify the deadline for an appraisal. If however, it does not, it would be to your benefit to wait as long as possible for the appraisal.

LaShawn thanks so much for your quick response. It is a production builder and I did review the sales contract to make sure we are protected...so I think we are good there...I am probably more just overly curious and anxious to see how the appraisal comes in. The builder (their reps) were telling me that there is a premium that is associated with a new home versus and existing home but I haven't found any documentation on that. We signed the agreement Nov. 1 and since then the home values have declined about 8% so I am hoping that we see about that percent decrease in the appraisal price by the time we close in June 2009...Is 8% consistent in what you have been seeing in the area?

Hi Lisa,

Not knowing whether you are building with a custom builder or a production builder makes it a bit more challenging for me to help you with specifics. If you are building with a custom builder and have obtained a construction loan, your lender will not release payments to the builder until certain phases of the construction are complete and the property meets the lender's value (based on an appraisal that they will order that is completed in phases).

If you are purchasing a production home and the builder/developer is carrying the costs to build the house that you agreed to purchase pre-construction, your lender will still require that the home meet appraisal before they loan you the money.

...But, to make sure your escrow deposit is protected in the event of a low appraisal, I would highly recommend that you review your sales contract, as I am confident it contains language that will answer your questions about the appraisal and your financing contingency.

There is no specific "premium" that new homes get vs. resale homes. The value is determined by the most recent sales for comparable properties...

In addition to representing several Buyers with their new home purchase (both custom & production), I am also married to a Residential Contractor who has been in the business as well for 8+ years...this is a topic we both have first-hand experience with.

If you have further questions or would like to talk directly, feel free to call me at (321) 377-0157. I'll be happy to see how I can help.

LaShawn Norden, PA, REALTOR
Accredited Luxury Home Specialist
RE/MAX Central Realty
(321) 377-0157
LaShawn@LaShawnNorden.com http://www.LaShawnNorden.com