In our current market it is all about supply and demand.
One other thing: Builders don't have the same attitude about standing inventory or homes that are completed that they do not have a buyer for.
Is it possible the appraisal can be rebutted at all? Until 2/15, the appraiser is still selected by your lender. After that time, FHA loans must comply with the HVCC regulations already in place for conventional loans and have the appraiser assigned by some outside group. Is it possible another appraiser might come in closer to contract price?
I'm going to play 'devil's advocate' to you for a minute. A builder in today's market is trying to cover his cost for the building and have a small profit. Most are seeing a VERY small profit, if any. His motivation is not taking more of a loss than he has to, I would suspect. I doubt he's making a killing off of you. You might want to consider that and ask him to provide you with an appraisal himself that justifies his pricing.
I had a seller who needed a higher price. We hired an appraiser who teaches all other appraisers in the Sac County area, figuring they would use the most sophisticated methods out there, as a resident 'expert' of the area. They ended up coming in at the same price as the original appraisal so, while my seller didn't like it, we can't change the market. The buyer ended up coming up on price, out of pocket, to appease the difference a little but the lower price was very painful. ( there was $100K difference)
You're not that far off. and If you had another appraisal and it came in at full value would you go ahead? I think that's the next step. Get a second opinion on the appraisal, let the seller order it and pay for it, saying that you would go with it if it's higher. Or...walk away and see if the seller calls you back to the table, if you don't want to pay the difference out of pocket. But you may be out the money for your upgrades depending on how it's worded in the original contract..
God luck and I'd love to hear the outcome if you wouldn't mind keeping us informed.
In our case, the FHA appraisal of $242,000 is what would run with the property for 6 months not the review appraisal of $210,000. The seller didn't mind this as the property was actually only listed and sold at $235,000.
Part of the problem with appraisals right now, is that our prices in 95757 have increased a little in the past 3 months instead of continuing to decline. Some appraisers are continuing the downward trend on prices not taking into account that prices have leveled off at this time or maybe risen a little.
Wow... that is a very frustrating postion to be in. You need to read your contract, often they are written that you do not get it back... so read carefully.
In this market, I feel all the new homes are overpriced. Usually they have their own financing and manage it but in an area that already has comps, not a good sign.
What are your options
1. Conpromise and pay 1/2
2. Press hard, tell them that the only person that is going to be able to purchase home is someone who is willing to pay more than homes is worth
3. Walk away
4. Perhaps try to get them to add more upgrades so that you at least get some value for additional moneys coming in (sometimes they get such a great price, that it will not cost them 10,000 but you may end up with a 10,000 in upgrades....which will at least give you value for the additional moneys and maybe even rolled into the loan due to the added value into the home). This seems to me one of the better solutions. Negotiations to try to find a win win situations.
The problem I fear for you is possibly loose $14,000 or pay an extra $10,000, that is why I think #4 may balance the scale for you a little bit. Be firm but respectful when negotiating. If there are already other houses for sale in the neighborhood, remind them it will be a challenge to get someone to pay above appaised price when others are for sale for less.
Best of Luck!!!
the difference is 10k less now builder is willing to go 50% . i have an fha loan. i want to buy house for appraised value. 6 homes apraised in the neighborhood have an avarage of 27k depreciation from sale price.
Has the builder asked you to make up the difference? I would tell the builder that they need to sell at the appraised value or no deal. How much of a difference are we talking about?
In most cases, you would then need to make up the difference in your down payment. Lenders will use the lesser of the sales price or the appraised value when they determine your loan-to-value (LTV). If your financing is at a critical LTV (80% for conventional or 96.5% for FHA), you would likely have to bring in additional funds to close.
If I can provide any additional detail, don't hesitate to get in touch.