appraisal question

beanie7132 · ‎02-05-2014

We are going for a new build. USDA loan. The builder is offering 50% off any upgrades for a limited time.

I do not know how this works, so I figured I would ask you folks. Lets say contract price comes to 165K and we opt for 10K in upgrades (hardwoods, surround sound, upgraded granite, whatever). Of the 10K we get 50% off. Making upgrades only 5K. When it comes time for appraisal, are the upgrades taken into consideration? Or will the home appraise for contract price of 165K leaving us to pay for upgrades out of pocket?

Jamisonke · ‎02-05-2014

We just closed on the purchase of a new construction home. Our upgrades were included in the appraisal for our FHA loan.

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n0smirc · ‎02-05-2014

@beanie7132 wrote:
We are going for a new build. USDA loan. The builder is offering 50% off any upgrades for a limited time.
I do not know how this works, so I figured I would ask you folks. Lets say contract price comes to 165K and we opt for 10K in upgrades (hardwoods, surround sound, upgraded granite, whatever). Of the 10K we get 50% off. Making upgrades only 5K. When it comes time for appraisal, are the upgrades taken into consideration? Or will the home appraise for contract price of 165K leaving us to pay for upgrades out of pocket?

We're doing USDA as well for a new build. The appraiser will look at comps in the area, which as you guessed it, include your own builder since it's generally going to be the same community and similar quality of build. Our appraiser was provided a copy of the contract which went into painstaking detail every finish out and trim item that was upgraded and comes standard in the home, they are provided as much information as possible help get an accurate appraisal for your mortgage. Our house appraised for over our contract price which includes upgrades.

beanie7132 · ‎02-05-2014

oh thank goodness. If it werent for y'alls responses I wouldnt have slept good tonight.

Now to decide on the one for 154K or the one for 165K - exact same home/builder. One neighborhood is just 3 miles further out....... 154K gives me more money for upgrades since they are included in the appraisal.......... ooohweeee

ShanetheMortgageMan · ‎02-05-2014

@beanie7132 wrote:
oh thank goodness. If it werent for y'alls responses I wouldnt have slept good tonight.

Now to decide on the one for 154K or the one for 165K - exact same home/builder. One neighborhood is just 3 miles further out....... 154K gives me more money for upgrades since they are included in the appraisal.......... ooohweeee

If you'd be doing those upgrades later, usually they can come at a higher cost, so getting them when the home is being built would probably end up being a better deal. Compare the cost so you know for sure. The additional payment on the extra $11k would be about $57/mo (assuming a 4% interest rate & additional guarantee fees). Would the additional upgrades be worth $57/mo to you?

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beanie7132 · ‎02-05-2014

more math?

What would you do? Hardwood floors throughout downstairs and a really nice tub in the master bath? We have been renting an oooold home for 4 years, the thing at the top of our wish list for our realtor was a tub in the master bath. Ours right now is just a 2x2 stand up shower.

I think it will be an easier decision once I see the builders pricing for some of these items......

StartingOver10 · ‎02-05-2014

@beanie7132 wrote:
more math?
,,,,

lol, ...yes. Financing has lots of math involved....

n0smirc · ‎02-10-2014

@beanie7132 wrote:
more math?

What would you do? Hardwood floors throughout downstairs and a really nice tub in the master bath? We have been renting an oooold home for 4 years, the thing at the top of our wish list for our realtor was a tub in the master bath. Ours right now is just a 2x2 stand up shower.

I think it will be an easier decision once I see the builders pricing for some of these items......

Builders also often have specials and throw in tons of upgrades for cheap or free. Also, if you go for an inventory home, you may luck into a really great deal during slow times of the year. If you get a realtor on your side, they can help you narrow down on your must haves and give you an idea of what you can realistically get for your budget and do some negotiating for you.

We ended up getting a home (that is almost done being built) that has tons of upgrades, but the original buyer was having issues selling their current home so they needed an out. It's bigger than the usual plan, has a lot of upgrades, some that I didn't even realize I might want (but are awesome and just add to the home) at a price lower than the base plan. We have lots of hardwood on the main floor + upgrade master bath too. Those were musts for me.

dtjones052209 · ‎02-10-2014

@n0smirc wrote:
@beanie7132 wrote:
more math?

What would you do? Hardwood floors throughout downstairs and a really nice tub in the master bath? We have been renting an oooold home for 4 years, the thing at the top of our wish list for our realtor was a tub in the master bath. Ours right now is just a 2x2 stand up shower.

I think it will be an easier decision once I see the builders pricing for some of these items......
Builders also often have specials and throw in tons of upgrades for cheap or free. Also, if you go for an inventory home, you may luck into a really great deal during slow times of the year. If you get a realtor on your side, they can help you narrow down on your must haves and give you an idea of what you can realistically get for your budget and do some negotiating for you.

We ended up getting a home (that is almost done being built) that has tons of upgrades, but the original buyer was having issues selling their current home so they needed an out. It's bigger than the usual plan, has a lot of upgrades, some that I didn't even realize I might want (but are awesome and just add to the home) at a price lower than the base plan. We have lots of hardwood on the main floor + upgrade master bath too. Those were musts for me.

Congrats N0smirc! My must here in Texas was a media room. I had to have it and adding an addition 10k to the price was worth it.

OP- I think the choice comes down to if you had the opportunity to build your dream home on your budget what would you want? Or if you could find a pre existing home what are some things that you definitely have to have. I like the idea of new and my taste and not someone else's dream. JMO

Happy shopping to you!