Feeling dupped

[Anonymous]

Ok so i was casually looking at houses and came across a builder doing closeout pricing on current inventory spec homes. Found a house i liked originally listed at 328k but they were offering the house at 295k if i could close in 45 days and use their preferred lender. Got a preapproval and rate quote at 3.62 and started the process. Fast fwd 3 wks. We couldnt lock at 45 days without some crazy fee then i was out of country. Back now and the rate is now 3.86. So not too happy about that rate increase. TOday i get appraisal back and house has appraised at 307k. No where near the 328-330k they told me the house was worth. Is it normal for the appraisal to be this low in a new neighborhood? I am feeling very conflicted.

[Anonymous]

I'm not an expert but if it was a closout it means it wasn't able to sell at the original price. In that case, the appraisal makes sense. If you like the house and the area, don't get too caught up in the lower appraisal. 

[ArmyWifeMBA]

I agree.  After all, you are still purchasing at a cost less than the appraised value.  Not sure what the problem is here. There is still room for the value to increase over the years as long as there are other homes being built in the area.  By the way, before going into a contract on my house, I spoke with an area appraiser to better understand the neighborhood and how they appraise property, what features increases in value, and what most buyers are looking for.

Hope you were able to get the home, if you like it. 

Good luck.

[Xistaben2]

I think what the OP is feeling duped about is that they may have purposely priced high originally knowing it wouldn't appraise, so they do a "close out price" that makes it seem like they generously lowered the price by a lot, when reality shows that the appraisal came in somewhat on par with their super duper deal.  Not so much.

Im sure it's a form of strategy to get it sold.  In my new construction neighborhood, they have these close out deals, and I look at the listing price history and as the subdivision gets closer to completion, the unsold built houses go up and up in price.  My guess is when the neighborhood is close to finished, they drop their increasing price to where it needs to be for quick sale.  Buyer comes in thinking it's a steal, when it isn't.

To everyone else's point, if it appraises, and the price was acceptable when you signed, objectively, nothing has changed.  Just your pride of "falling for it" I suppose.  Probably not a big deal though.

[Anonymous]

Xitaben hit the nail on the head. I feel like a sucker. I still like the house and I will be happy there but it stings thinking I was going to close with a lot more equity.

That coupled with the slightly higher interest rate made me a bit sad today. Oh well, just wanted to share my experience.

[StartingOver10]

You are in a better position than the vast majority of new home buyers.  When you buy a new home you usually pay top, top dollar and are upside down for the first few years. It is disguised a bit because the builders artificially increase their prices throughout the construction period of the new development until the end when the close out pricing starts. You actually are getting some "equity" if the appraisal is accurate. That's a good thing. It isn't as much as you had planned on when you signed the contract, but then value is constantly changing with the market. If you plan to stay a long time in this house, don't worry about the small differences in value today,  If you plan to sell quickly, then it is a concern.