New home versus used home appraisals?

Asked by Mommy of 3 boys, Folsom, CA Thu May 7, 2009

If a homebuilder is still actively selling in your community, do the new homes or the resale homes appraise for more? (Considering the resale homes are in good condition, of course.) Do the homebuilders have to go through the same appraisal process for lending reasons? If so, do they have "new home only" appraisers?

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Truett Neath…, , Auburn, CA
Tue Jul 6, 2010
Appraisers DO look at listings, in fact, recently this is a requirement. We also look closely at CONCESSIONS - there is now a place on the MLS form that addresses CONCESSIONS (the first item of adjustment). Also, some of those resale homes have been landscaped, added patios or decks, or upgrades that were not there when sold, etc. Perhaps you should use a REALTOR® as a consultant (paid) to help you instead of a tract salesman who has only one product to sell.

Truett Neathery
Neathery Appraisals
Auburn, CA
0 votes
Erin, , South Lake Tahoe, CA
Fri May 8, 2009
Hi Mommy of: Thanks for responding with clarification on your motivation.

As Sue points out, new home builders have their own set of rules and can offer much more in the way of incentives than can a resale home seller such as yourself. It becomes really tough for resale homes to compete with new homes, especially for those in the same neighborhood.

I also agree complete with Ed. A successful transaction comes together somehow when the buyer and seller are ready, willing and able to complete the transaction.

So, you and your agent need to get creative in this situation and find the right solution.

I hope this helps.
Web Reference:  http://SoldByErin.net
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Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Fri May 8, 2009
So, if the new homes are being sold for $475K, but the lender gives a $10K kick-back, the house only needs to appraise for $465K? Is that what you are stating? With that in mind, is it feasible that the lender would give up to 18%? Because that is the discrepancy amount between what they are selling the new homes for and what they appraised our 3 yr old house for.
Thanks again for bringing some insight to the situation. If I could just understand their logic, I might feel better about it...
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Fri May 8, 2009
One point you might be missing is that an appraiser can only look at 'sold' price, not those currently for sale. They will also factor in all ofthose cocessions that a new home buyer would receive to lower the actal value. so, for example, if the house sells for $500,00, but they give 3%, $10,000 if you use their lender, etc....those would all be deducted from the actal sales price....maybe that's part of the discrepancy?
Web Reference:  http://www.suearcher.com
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Ed Favinger, Agent, Folsom, CA
Fri May 8, 2009
Well Mom...

It looks to me from what you are saying... you have a right to be frustrated... but listen... I've been doing this since 1981... and I've run into this many times with an appraisal that came in lower than what was agreed to by you and the Buyer...

I'm sure your agent is working on it... I'd get another appraisal and pay for it...

This new system of lenders ordering appraisals through a middle man is a joke... I don't know how that will affect your situation...

Bottom line... as my old mentor told me years ago... "When a Buyer wants to Buy and a Seller wants to Sell, they'll figure a way in spite of all the obstacles that may get thrown in front of them..."

Seems like that has always been the case... if your buyers are convinced of value... that should mean something... I think you'll eventually solve this...

Stay on top of the closed sales..in the mean time...

Keep us posted...

I hope this helps...
0 votes
Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Fri May 8, 2009
Actually, in Saturdays newspaper, under the New Homes section, these homes were listed "starting at..." the $475K price for our home. Again, with the banks information listed below as the "preferred lender". So I am comparing apples to apples in current home pricing. The last recorded close price for our home was in February for $490K. Again, over $40K more than what we are trying to sell our house for and have 2 buyers wanting to buy our house for!
0 votes
Ed Favinger, Agent, Folsom, CA
Fri May 8, 2009
Hey Mom...

Lets make sure we are talking about the same thing...

When you say the new homes are "selling" for what ever price they are in your neighborhood... are talking about homes that "are for sale now".... or homes that have recently "closed escrow"...

There is a big difference...

Another thing to remember is that you are not going to get back all the $$$ for the upgrades you put in...

I hope this helps...

In the mean time.. .make it a great day...
0 votes
Mommy of 3 b…, Both Buyer And Seller, Folsom, CA
Fri May 8, 2009
So, it sounds like new homes are not held to the same lending rigors of used home sales? I understand the lendors using incentives to entice buyers, but I would think the homes would have to undergo a similar appraisal process.
I am baffled as to how the same bank can be the preferred lender for a new home down the street from us selling at 8% higher starting price than the resale home we are trying to sell, but their appraiser valued our house at $100K less (20%) than these new homes. (Again our home is only 3 years old, according to the home inspector "in excellent condition" and has over $60K in upgrades) Either the new homes they are lending on are not worth the price they are selling them for OR our home is worth more than their appraiser valued it for. I cannot see any other reasoning... but maybe I am too personally invested in the situation.
As for our appraisal, it was done prior to May 1st and the appraiser seemed to use mostly the foreclosure or short sales in our neighborhood, disregarding the other comparable homes in our area that are selling for our same price range. To me they should consider the new homes at $475K, the short sales at $400K, the comp homes at $440K and our home would logically end up somewhere in the middle. But the appraiser valued us BELOW the cheapest short sale. There have been numerous new homes in our neighborhood sold for over $500K in the last 6 months. I don't get the logic!
We are still trying to get the matter resolved and hope to still be able to have a good outcome. As for dropping our sales price, we are not a distress sale and will end up staying put rather than losing that much value in our house. We were just trying to get into a bigger home before our eldest started school so we wouldn't have to displace him in a few years. I guess the market is making that virtually impossible these days...
Thanks for all the feedback and information!
0 votes
Erin, , South Lake Tahoe, CA
Fri May 8, 2009
As of May 1, new regulations for appraisers have been in effect. I am not sure if your appraisal was dated before or after May 1. That might be a response you can post here. It's always tough to be one of the first affected by a new, supposedly better, ha ha, regulation.

It's called the Home Valuation Code of Conduct. Each appraisal for a Fannie Mae or Freddie Mac backed loan request is assigned an appraiser from an AMS--Appraisal Management Company. So lenders no longer have access to their "favorite" appraiser and have to deal with whoever is assigned to their loan file.

The bottom line is that it will take more time for all of this to process, to 30-day escrows are probably a thing of the past and it will cost the Buyer more money to get a second opinion of their appraisal.

Again, have you considered (or can you) lower your sale price without going into short-sale position? If you are short, can you bring money to the closing to close the deal? What you ultimately do will be tied to how important it is to you to sell your home right now.
Web Reference:  http://SoldByErin.net
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Thu May 7, 2009
New homes are most often tied to a lender who gives incentives that make it hard for another lender to compete with. I wouldn't say that they are even in the same conversation with resale homes...even if they're in the same development. And, up until this week with the new regulations for appraisers, I have never experienced a discussion for my buyer on a new home not appraising for the sale price. They were all 'on the same team'...but that's new home sales.

Resale homes are competing with the rest of the market, not just in the same development area. Are we answering your questions at all??
Web Reference:  http://www.suearcher.com
0 votes
Ed Favinger, Agent, Folsom, CA
Thu May 7, 2009
Hey Mom...

Sounds like you are still dealing with that issue of the appraisal on your home...

I'm not an appraiser.. just a Real Estate Broker who's been in the business for a bit... and the short answer to your question...? is NO..

I'm sure you will get some other opinions on here besides mine... They might however give the new home a little more weight because it is brand new... and then take away some value because your's is "pre-owned" shall we say...

They will use a market approach and a cost approach to arrive at a value I know that...

However.. I'm dying to know what happened to your sale.. last we heard you were having a difficult time completing a sale on your home there because the appraiser wouldn't give you value...

It might have been because of the "stale dates" of the sales.. "Review appraisers" are going to look at the most recent sales first and then go back no more than 6 months...

I hope this helps...

Bring us up to speed on your situation...

Make it a great day...
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