I signed a contract to build a home in Dec 2007. They are now 2-3 months from finishing the construction. At the time they were offering 20K in options if I signed up before the end of the year, which I did.
Now I notice that the price of the Model home that I am building has DROPPED 20K from the base cost of what it was in December. Not sure on what options incentives they are giving now but I'm sure it is not $0.
How would FHA Appraisal look at this since someone else can now build the same house next me for 20K less that what I am?
That is happening in the development that I am looking to buy. The builder did not really lower the cost of the house, they simply made it cheaper. All of the standard upgrades have been removed and the house now has vinyl floors as opposed to wood, etc. I am sure that if you were to price a new home with the same upgrades that you have the price would be very similar. BTW, the home builder in my case is Pulte.
My builder is Shea Homes...BTW, I had previously worked with Pulte and they were great. I backed out of a house due to a contingency sale on mine and they refunded every penny of earnest $ within 2 days.
I am going to have my Brother inlaw go over to Shea office and find out what incentives they are offering.
Shea has very nice quality homes from appraisers I've spoken to.
If your appraisal has been done already then there shouldn't be any issue with the value of your home - however if the appraisal hasn't been done yet then the new sales prices could impact your appraisal negatively, perhaps even to the point where the home might not appraise for the sales price (very uncommon, but can happen). If the home doesn't appraise out, or even if it does, I'd ask if there is anything that can be done to adjust your sales price downwards if it's true that the same exact model is being sold for $20k less. The model will need to be exact though, there are some models that are being discounted locally where the new models have less base features in them than the same model had a few months ago... so if you haven't, get all of the details on the new model vs. the old model before bringing the price reduction idea of.
Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states
I am sort of the same situation, bought in October, but they didn't start till construction until March. They lowered the price before I purchase, and have thrown in a ton of upgrades, Granite countertops, Stainless Appliances, tile kitchen floor and Wood bannister on the staircase, yet I am still concerned about my upgrades and appraisal. They also gave 10,000 incentives, which is just about what I spent, plus 9,000 in plantation shutters...thats my main concern. I figure if it doesn't appraise enough, then I would have bargining power with them... except for the shutter price.
When the idea of the appraisal not coming in high enough first surfaced, I paniced. Never had even thought of the possibility. So, we have included the shutters in the mortgage, but they are not going to be ordered and installed until after the appraisal, so I can back out if necessary.
It was just a casual conversation with the Mortgage person when it came up. He says he has never had it happen (not apprasing enough) with their homes...but that in today's market, they are just trying to cover all the bases. My builder (and I am using them for mortgage) is John Laing Homes
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