Profile picture for fadingaway

Appraisal Concern

Two weeks prior to closing on a newly constructed Pulte home, the appraisal came in approximately $10,000 under the negotiated selling price.  The subdivision we are buying in is relatively new and at least 80 homes have been sold within the last two years - naturally, of the eight comps, only one was used for comparison sake.  The appraiser traveled 47 miles (from Wixom) and I am pretty confident isn't too familiar with the immediate area...

The Pulte sales rep. called today and basically gave me two options: (1)  Bring the additional $10k to closing - which we don't have, or (2) Eliminate some options of the home.  Seeing as though the closing is two weeks away, most of the high ticket options (3-car garage, oversized lot, fireplace) are already in place.  The only option left to 'install" is the sod/sprinklers that were added for $4,590.  The lot size is $13,811 square feet and $4590 for sod and sprinklers is a fine deal.

Bringing the extra $10k to closing is simply not an option.  The home is being financed thru Pulte Mortgage.  We have already left a deposit of $11k.  

What recourse/advice should we be following at this point?  Demand that Pulte lower the price?  Walk away?  Request a second appraisal from someone that knows the market?  When I pressed the Pulte sales rep. for verification of an appraisal clause in the purchase agreement, I was unable to receive a definitive answer.

  • October 23 2011 - Macomb Township
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Answers (8)

Profile picture for sunnyview
I would not pay for a house that did not appraise, but I do not know what your contract says. I think that you may need to get legal advice. You definitely cannot rely on a builders rep to tell you what the contract says.

Get a copy of the contract ASAP so you do not miss any timeline, ask for a copy of the appraisal and get that info to an attorney. A first consult is often not expensive and will be worth every penny in this situation.
  • October 24 2011
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Is there anything glaringly different on your house from the rest in the subdivision.  If not and as you say 80 have sold in the last couple 2 years, I can not see any reason why all the comps would not be from within the subdivision.  Also why was the appraisal done just 2 weeks before closing.  I believe appraisals for new construction are good for 180 days subject to a final inspection.  To wait this far into the process really puts you in a bad spot.
  • October 24 2011
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If you used a Realtor ask he or she to provide a Market Analysis for the property. If comps indicate sales price/value is confirmed then an option may be to go to another lender which would require another appraisal. There is no assurance that a second appraisal will be for the sales price but a $400 expenditure is far better option than the 2 your builder offered. You mention a $11K deposit, and I assume that would not be in jeopardy if you were not able to complete the purchase because of low appraisal........ A reasonable extension should be given for you to resolve appraisal issue.
Let's us know resolution.
  • October 24 2011
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Profile picture for shapiroamg
I hope you have an attorney. Funny how you are using the in house mortgage company, the value comes in a little lower and now its your issue. IMHO, Pulte should be dropping their price by the $10k with no changes, but I wouldn't hold your breath waiting for that to happen.
  • October 24 2011
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If you had used a realtor you should have an "Appraisal Contingency Clause" which would plainly state that you are not obligated to purchase a the home if it does not appraise for the sales price with options.  The problem is that your contract probably states that you must purchase as long as the appraisal is the same or greater than the base price.  I would agree that using another lender or go back to your lender, ask that they dispute the appraisal amount and supply the other closed comparables.  Most appraisers are only going back 3 - 6 mths at the most so make sure all of the comps are current.  Your lender needs to get involved with the builder to resolve this issue.
  • October 24 2011
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Profile picture for fadingaway
Thanks to everyone who offered advice and provided suggestions.  Upon closer inspection of the appraisal, I noticed that a Bank Owned property in the eight comps that significantly lowered the value of my new home...

Long story short - after refusing to buckle to Pulte's demands and stood my ground, a new appraisal was ordered by the seller.  Funny thing is, once they realized that I wasn't in a "desperate situation" and unwilling to cancel sod/sprinklers from the purchase agreements, the new appraisal came in within $300 of the selling price.

I close a week from Tuesday :)
  • November 13 2011
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Profile picture for wetdawgs
Thanks for stopping by and providing such a positive update!  I'm so glad you stood your ground.
  • November 13 2011
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Profile picture for sunnyview
Awesome news! I am so glad that you took time to update everyone. I hope you come back and celebrate when you close :)
  • November 13 2011
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