Friday, September 7, 2012

The dream is turning into a nightmare...

  It has been a while since our last update, but there has not been much progress.  In the last post, we mentioned that there was a $27,000 difference between the appraisal and the build cost.  I wasn't going to post the details of it, but I have had a change of heart, especially after today's phone conversation with Ryan Homes and NVR. 

  Ryan Homes offered to drop the build price $10,000, leaving us with the remaining $17,000 to come out of our pocket.  We said that wasn't acceptable, but we would match their $10,000 and we would be willing to split the remainder with them as well.  Ryan said no way, and that in their calculations, the $7,000 was already being made up from their NVR mortgage credit.  This didn't make me happy since the only way I view the mortgage credit was as a rebate since their closing fees were substantially higher than that of other lending institutions, other wise it removed any actual value of that credit (I will break try to break this down more clearly at the end of this post).  They claimed to understand my point and agreed to chip in an additional $2,500, leaving Ryan Home responsible for $12,500 and us $14,500.  While Ryan didn’t meet us half way across the negotiating table, at least we didn’t get completely bent over it….or so I thought.  So we told them to send us a copy of the pre-build appraisal and we would look it over and come in to sign the new amended sales agreement reflecting these negotiations.

  Unfortunately, we asked for that appraisal three weeks ago and never received it, so today I called NVR (who were supposed to be the ones emailing it).  Our mortgage rep. proceeded to tell us that she would send it to us when it was completed.  WAIT A MINUTE!!  WHEN IT’S COMPLETED???  Yep, the appraisal hasn’t actually been done.  According to her the appraiser was still trying to find comps and that the number that he had given to Ryan Homes over a month ago was a “ballpark” number.  All of the negotiations were for naught.  Someone lied to us, either the appraiser who Ryan Homes and NVR are blaming, or it was someone from Ryan Homes.

  I called our sales rep at Ryan Homes and told her what I had found out, and she replied that she had just found out this same information as I did yesterday, and was just about to call me (as she always claims).  I told her point blank that this did not make me happy, that they had not only passed on completely false and misleading information, but attempted to negotiate new terms based on this make-believe number as well.  Ryan Homes should have done their due diligence and asked for a copy of this appraisal just as I was doing.  I only wish that I had requested it before going through the hassle of negotiating back and forth. 

  Before hanging up, I asked her when she thought ground breaking would even be possible if the pre-build appraisal gets cleaned up since we are a mere 97 days away from the original closing date.  Apparently the developer has not finished the required work to get the plat recorded by the county, but thinks he should be done sometime in October.  This means instead of breaking ground this month, which we thought was going to happen, it will be November, but the sales rep. sounded like that was even doubtful. 

  In summary, last month we agreed to overpay for a Ryan Home only to find out that we were lied to about the actual value of the home and instead of spending Christmas in our new house, we will be lucky if it’s done by Easter. 

*The information below is to clarify my position on why it isn’t fair to use the NVR credit to make up the cost vs. value differential.  I will break down the equation for their profit model, at least how I see, it in simple business terms.

(Material Cost) + (land cost) + (labor cost) + (Overhead expenses) + (NVR Credit) x (profit margin) = (Customers Build Cost) – (NVR Credit) = (Customer thinks they are getting a deal)

The problem is that the NVR credit is a wash since whatever value they give it, they can just slide it in on the backside of the deal so they still make the same amount of profit.  It’s exactly the sales strategy that most furniture stores use.  You know the ones, “This week, all furniture is 40% off with 3 years 0% financing”.  These places always claim to have a sale, but the truth is the furniture is never sold at “suggested retail value”.  It’s just some made up number that they know they are going to “discount” to get the price they really want.

The only time that this credit could have any REAL value is if the final discounted price gives you true equity in the home.  In other words, you would be able to sell your home for a profit the very next day all thanks to the discount you get for using NVR mortgage.


  1. Wow that is crazy. I guess the question is are you still going through with it?

  2. I would be so pissed that I would most likely walk away. How can you trust them after all that bs? It only gets worse when they actually start building the house.

  3. O M G........I dont know how you are even still going thru all this and havent even broken ground yet? I have tried to figure out if using NVR is to my benefit or not, have done a bunch of homework and have gotten 3 other banks to give my cost estimates......but its all chinese.....I still dont have a clear grip on it and if its a good deal or NOT.....So I feel some of your pain anywayz :(

  4. I'm surprised... I thought NVR hired their own appraiser, so in effect they are in NVR's back pocket too, able to appraise the house at whatever is needed to justify the total cost (insert imaginary number here) originally quoted. I bet NVR even makes a profit on the mere hiring of an appraiser...

    Heads they win, tails you lose!