Tuesday, July 31, 2012

Appraisal Woes

We stopped by the lot on Sunday during a leisurely drive.  It's kinda depressing to continually drive by your lot when there isn't even a hole or foundation or anything, but we apparently like torturing ourselves.  The nice thing was our utilities ditch was filled in, so at least that's a step in the right direction.  And, they installed curbs in part of the new road that's going in for the rest of our Phase III.  So, we did a lot of walking/trespassing in the other bits of land -- standing on hills and saying things like: "This is a great view!"  "Yeah, but no walkout up here!"  "What's this giant ditch for?"  Etc, etc.

We stopped by the model home office to see if our SR had heard anything back about the topography map yet (we haven't put in the order for any basement windows yet, since we're waiting on the topo map before knowing how the land will be graded around the back/walkout).  Unfortunately, no topo map yet, but we did get unexpected news on the appraisal.  I believe my husband had posted before about our concerns (and RH's concerns) about how much our house costs to build in relation to how much it's actually "worth" in the bank's mind.  Well, we have been waiting to hear back about a pre-appraisal that was requested to see how different those two numbers will be.

There will be at least a $27,000 difference.

I say at least because we haven't included any basement windows yet into that price (there will be at least 2 full windows, but possibly 4, depending on grading).

We cannot make up this difference alone, since we are not getting any kind of landscaping in our community (not offered in NE Ohio) and the bulk of the money in our savings will be going toward that eventually.  Also, we kinda need furniture, you know, to like, use and live with?

So, now we wait.  We wait for word from our SR, who said she would speak with the Sales Manager to see what they can do to help us.  This is a critical time.  If they can't help us out, we will have to walk away.  I've been trying not to get too emotionally involved in this house for this exact reason, but it's been very very hard.

We keep saying things like, "In the next house..." and "We'll have to wait until the new house before we can..."  Now, I feel the need to qualify these statements with, "Well, in this next house, or whatever we ultimately build..."  We shopped at the local grocery store near our (hopefully) future new community Sunday after meeting with the SR.  Upon walking in, I said that we shouldn't even bother shopping here, and instead we should go back and shop at our current local store, since that's the one we'll likely be shopping at for the next 2-3 years while we continue to save up enough to buy some nice land and build from scratch.  I'm a rather negative person, although I would prefer to use the word "realistic."

So you, Dear Readers, will likely hear back from us at some point, most likely to chronicle the back-and-forth between us and RH that will inevitably come from this current issue.  But let's hope you also hear good news from us -- that we were able to come to a middle ground, and that we will be moving forward again, no longer tentatively.

12 comments:

  1. Hang in there. We've all hit some road bumps and gotten through them. There is always a greater plan. :)

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    1. Thanks. I'm trying to be positive/neutral. "It is what it is."

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  2. Just curious: Are others in your community having the same issue? It seems odd that RH would price these houses more than what the bank would appraise for. Clearly someone else has run into this there, no?

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    1. There was another family that built a house larger than ours (a Waverly), and they had a similar issue with their appraisal coming in less than the build price of their house (I believe they have a blog, but I don't follow it yet and wouldn't feel right linking to it from here). Their difference was higher than ours. I believe the problem lies in those of us that want to "option-out" the house. We are getting a lot of things up-front that others are willing to wait on or handle themselves later (such as granite, hardwood floors, lighting packages, appliances, etc). These are things that I want for my house right now, and that may cost a lot, but don't really add to the overall "value" of the house in the bank's eyes. What does the bank care, for example, if I have paint on my walls? But I want it done in advance and RH charges me $2k for it. That's just a small example, but these small things add up to a build cost that is definitely going to be higher than what it would cost to just buy a similar sized and featured house. Plus, there aren't a lot of similar sized and featured houses selling in our area right now. There are a few for sale that cost even more than what our build price is, but they aren't selling (hmm, I wonder why?) and the appraisal can only use the sold houses. So we're stuck. We're also stuck because the appraisal is only good for 120 days, and it's 130+ until our estimated closing date. What if things become even bleaker in the housing market at day 121? Where will we be then? *sigh* Sorry for the lengthy reply, but I wanted to explain my take on this.

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    2. We did the same thing! We added upgrades I wanted NOW! Not later and my SR said she hopes the house doesn't appraise lower! If it does, what are the options? Does the bank just not approved the appraisal or do you just have to pay the difference? Please advise.

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    3. The way it is for us is that we are expected to pay the difference. But, we are trying to work with RH to see how much they can help us (ie, by decreasing the overall house price slightly). Hopefully, we can come to some kind of agreement so we both aren't footing the whole bill.

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    4. We have been through so much lately and I must admit it may take longer than expected; however, I believe everything will work out because RH does want the family to have the home. They worked with us diligently from Feb to July until they approved our loan. HANG IN THERE FOR YOUR DREAM HOME!

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  3. We have a VA loan and they recently came out to our house to appraise. The house was only in drywall, which means they did not take most of our upgrades into consideration. They appraised the house about $50,000 less than RH told us it was worth after our upgrades. Fortunately for us, we received about $50,000 in free incentives so the two cancel each other out.

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    1. I would ask if you're going to request another appraisal after your house is more finished, but if it equals out in the end, I guess there's no real reason to. That's good that it worked out for you.

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  4. WOW...Are you guys saying that you have heard of cases where houses are not appraising for the Ryan sale price? How often is this happening? In my opinion we did put a lot of options into our home but we also decided not to include some options (granite, brick, stone fireplace etc etc). I like CMM am doing a VA loan but I can tell you this no one from Ryan ever advised us that there was a possibility that our house would not appraise for the sale price. sounds to me that these homes may be overpriced. I can tell you this if they come back and tell us that our house appraises for thousands less that the sales price I'm not sure what we will do.

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    1. It HAS happened, but it's not the norm. Again, I think you only have to worry about it if you're getting A LOT of options. Usually, there's no problem with the appraisal and everything works out. We mentioned our concerns to our NVR rep at our first meeting, and our SR echoed them to us at one of our later, change-order-related meetings. If no one has brought it up to you, then you will probably be fine. We were kind of expecting this because of all the upgrades we chose.

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