new construction appraisal - when should it happen?

Asked by Mona, Huntington, NY Fri Sep 19, 2008

so here is our dilemma. We are buying a new construction property in Carteret, NJ (as witnessed by my other questions here). ;) We are in the midst of undergoing underwriting for a mortgage. When is the best time for us to get an appraisal of the property, so we can make sure that we are not doing all of this for nothing, if the appraisal does not come back the way we hope? Incidentally, purchase price is $366K, with approx 28K in upgrades included in that price. We are getting a 95% LTV loan, so there is no room for underappraisal. We are pretty sure that it'll appraise okay, but with the market being the way it is...

Right now the unit is drywalled, but not finished. The builder will be ordering the finishings after we get our conditional mortgage approval.

Any help would be very much appreciated.

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Silverpbull, Home Buyer, Carteret, NJ
Sat Oct 1, 2016
Our property is paid for, construction loan appraisal comes in at 220k, home is built and the finished appraisal comes in at 170k. arbitrated only to come back at 170k. Lender will only lend 90% of appraised value. If builder refused to lower price of home and property owner does not have enough cash for
difference, what are our rights?
0 votes
Jack Vollenb…, Agent, Flemington, NJ
Sun Sep 21, 2008
Andy answered this question correctly below. The appraisal can be ordered and done at any time during the building process. The report will just be written up "subject to completion" instead of "as-is". The final inspection will be done after completion, but does not affect the current value estimate of your new construction home.

In a declining market your best bet is to get the appraisal done as soon as possible. That's what I would do as a buyer. However, the bank orders the appraisal and I would get on the underwriter's case to get the process rolling along as swiftly as possible. Good luck with that......banks currently take their time to process and approve loan applications.

Jacobus "Jack" Vollenberg
RE Appraiser/RE Sales Associate
Vollenberg Appraisers/ERA Statewide Realty
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Mona, Home Buyer, Huntington, NY
Sat Sep 20, 2008
well, it's too late to bring in a buyers agent at this stage of the game, as we have already gone to contract, and we are in the midst of being accepted for the conditional approval (hence me putting that we are undergoing underwriting as we speak). we would like to have a pre appraisal done for our own peace of mind to make sure that we are not spitting in the wind. We are also already out of contract. We have done our own comps as best as we could. We decided on a whim to go look at this set of property, so it's not llike we could have brought in a buyers agent after the fact. We certainly never expected to fall in love with the property. so you can say "you should have" as much as you'd like, but it's not going to happen, so we have to go on from here.

As I said, I am pretty sure that it will appraise okay. I just wanted to make sur ethat we could legally get a preappraisal. And yes. I'm aware that the actual appraisal cannot be done until after the unit is finished.
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Scott Godzyk, Agent, Manchester, NH
Sat Sep 20, 2008
your mortgage company will need to get you approved for the mortgage before they will order an appraisal. As well as an appraisl can not be done until the property is finished. Normally you will receive conditional approval, based on athe condition that the property appraises at or above the sales price. You should have had a buyers agent who could have informed you on value and prcies before you put your offer in and went for a loan. Your best bet is to have a buyers agent who can look out for your interests and assist you with making an offer. When negotiating for a buyer broker, you can most likley do it at no cost to you as they get paid a commission by the lsiting agent through the fee offered in MLS. Have them tell you what similar properties have sold for and are listed at so you can put together a reasonable offer for you and not so low it wont get accpted. Good luck with your purchase.

Good Luck.
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Laura Gianno…, Agent, Manahawkin, NJ
Sat Sep 20, 2008
After you're sure the seller has clear Title and you have the mortgage company commitment, you or your mortgage company should call in an appraiser.

Laura Giannotta
Keller Williams Atlantic Shore
0 votes
Andy Raffle, , Yardley, PA
Fri Sep 19, 2008
The appraisal can be done at any time, even before construction of the property is begun. The appraiser can appraise the property, subject to "completion as per plans and specs". This will, typically, be done at some point inthe process and then the appraiser will come back out to do a final inspection and certify that the property is completed.

I hope this hopes.

Andy Raffle
Coldwell Banker Hearthside, Realtors
Yardley, PA 19067
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