Bank Assessment, Cost to build
We've been excited to build a modular home ever since we purchased 6.5 acres of land last year. We chose a builder, finished the plans, and went out to get estimates for all the contracting work, excavation,electrical,plumbing,etc. We're planning on building a 2400sft colonial, with 2 car garage.
We had all sorts of numbers come back, some double others, it was crazy. We decided on our contractors, and went to the bank for our mortgage application process. As part of the mortgage process, the bank has an outside company do an assessment for the finished value of the home. They do this two ways, cost to build, and comparison to three other homes of comparable specs that have sold recently.
We received the assessment back, and were shocked. The assessment came back for exactly what we were asking for from the bank, which was less than the cost to build! If we go through with building, the home would be worth less than we had into it to build it. The assessment was based on the comparable home sales in the area, most of which were selling for a loss, and they even had to go back over a year, and a town over to get the comparable homes. 2 of the comparable homes were owned by the same owner, who sold one at a loss to purchase the second comparable home.
We're not sure what to do now! Our builder thought one of the quotes was high, so he recommended someone he uses, and his quote came back even higher. Our pricing is relatively good, and I've searched since and can't find better pricing for contractors. We're thinking about getting another assessment ($300) but I fear the same results as they all use the same fannie mae forms.
Has anyone else run into this? I found this article - http://blogs.smartmoney.com/advice/2012/04/17/homes-cost-more-to-build-than-they%E2%80%99re-worth/
Any idea on how we should proceed? If we wait a year mortgage rates will only most likely go up. We feel like we're in a no win situation.
Appreciate any help!