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Updated about 3 years ago,

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2
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New Construction Build Appraisal Low

Anthony Bonafide
Posted

I am looking to start my real estate investment career by moving into a new home and renting my current home. However, I have run into an interesting situation with a new construction builder builder at the final stages of the process. I am about a month from closing(according to the sales team's estimate) and I have been proactively in contact with their preferred lender regarding interest, cash at close, closing date etc. They have not been too helpful with giving any of that information, and have not been responding too promptly. Recently, a sales agent for the builder called my partner and asked if we could bring an additional $50,000 to closing and that we would be closing in 3 weeks. These additional funds are being added on top of what we already were told. The sales agent stated that reason for us needing the additional funds is do to the third party appraisal coming in lower and the lender will not loan the original amount. Which all makes sense. However, they stated that the reason it appraised lower is because there are no comps in the neighborhood. They are pressuring us to commiting to bringing the money and stating that they must know and they will not hold the house for us.

Here is some information about the area, property and finances. The home base price was $450,000 with a $20,000 lot fee. We have upgraded the house to a final price of $572,000. We put down an initial deposit of $20,000 and after upgrades we gave a percentage of the upgrades in cash to the builder at $24,000. The loan officer stated we only need to bring ~$5,000 to close and provided documents. I asked if they can provide other options to pay more at closing and bring down the interest (2.99) simply because I like options and I have some additional money. They never responded and then we received that phone call. The home is a ~3,600 square foot home with 5 bed 4.5 bath. The neighborhood is not new and has been around for at least 5 years that I am aware of, and there are properties that seem to be comparable. For example 5 bed 3bath 3,200 square feet, or 4 bed 5bath 3,500 square feet all in the same sub division. However, the home we are purchasing is in a group of homes that are the first in this smaller area within the subdivision. It is a 3 min walk to other builders' in the same subdivision

I am just getting into real estate and investing and wondering if:

1. What they are saying about the appraisal is true?

2. What does that mean for the property and the value after if we closed?

Any comments and advice would be much appreciated.

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