New Construction.....Low Appraisal.......Advice Please

nancyjnFebruary 24, 2010

We are building a second home in the Phoenix area. It is a Pulte Home. We originally were going to finance with Pulte Mortagage, but decided to go with our local Credit Union instead. With upgrades and lot premium, the purchase price is $220,000. The appraisal value came in at $203,000. Pulte wanted the appraiser to reevaluate, but he is sticking with his original appraisal. The bank will finance 80% of $203,000. What is the best way to deal with this situation? We do not want to pay more for the house than the appraisal. We are willing to let it go if necessary.

Has anyone else been in a similar situation and what was your outcome? Have you had experience negotiating with Pulte?

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cordovamom

Do a google search on Pulte complaints. I think you'll find that you may want out of the deal anyway. I personally would not pay more for the home then it appraises for.

    Bookmark   February 24, 2010 at 3:22PM
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Billl

"With upgrades and lot premium" - there you go. The bells and whistles don't pay for themselves. If you build a new home and customize, it typically is going to cost more than it is worth. You are paying extra to have everything exactly the way you want it.

Of course, in the Phoenix market, you've seen values drop dramatically. The house might well have been worth $220k a year ago but only $203k right now.

    Bookmark   February 24, 2010 at 4:16PM
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sylviatexas1

see why builders like for buyers to use the builder's choice of lender, appraiser, etc?

    Bookmark   February 24, 2010 at 4:34PM
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sylviatexas1

sorry, I forgot to address your actual question.

There's really no negotiating with builders;
like car dealers, they set the price & determine the "concessions" they'll make & build those into the price.

& upgrades are a huge profit-maker;
the builders have a great deal of latitude on those items, which is why they can run specials where they throw in $20,000 to $40,000 "worth" of upgrades.

I think I'd tell them that I'm sorry it didn't work out & I'll pick up my earnest money day after tomorrow.

    Bookmark   February 24, 2010 at 4:38PM
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ncrealestateguy

You CAN negotiate with builders in this climate. You should tell them that you will pay the appraised price, which means you are paying full price, or you want your EMD back that day. You have a financing clause in your contract, now is the time to leverage it.

    Bookmark   February 25, 2010 at 7:24AM
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FatHen

I agree w/the others who cautioned to research complaints on builders and also cautioned about using the builder's lender. Pressuring appraisers to meet the number is how builders and others who had a vested interest in it, kept prices inflating during the bubble. These houses were never worth what they were selling for during the bubble, it was an illusion that burned many people along w/the foolish lenders. Last but not least, do not make the mistake of dismissing internet complaints you will find as baloney. MOST complaints about builders and their warranties are now hidden in private records due to mandatory arbitration clauses in builder contracts and warranty policies; arbitration prevents suing which is a public record, so no public record exists on numerous complaints. The internet can be the only way to find out about some, when people who are fed up with their lack of recourse post complaints to warn others. Check out google.com's search engine (I know that's obvious to most people but I try not to assume), also hadd.com and hobb.org I can't imagine anyone would go thru w/this sale after thoroughly checking this out. Don't fall for this attempt to sell you a house that's not worth what you will owe on it.

    Bookmark   February 25, 2010 at 10:36AM
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logic

Pulte's reputation for a quality build is generally poor.

IMO, you are fortunate that the appraisal issue came up, as that is your out...for which you will be thankful for once you do the research.

    Bookmark   February 25, 2010 at 11:00AM
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FatHen

I'm curious why the word "selling" in my post shows as a link--I didn't put a link in my post and don't even know how to.

    Bookmark   February 25, 2010 at 2:57PM
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clg7067

fathen, I don't see the link, so it must be something that GW puts in automatically.

    Bookmark   February 25, 2010 at 3:11PM
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graywings123

I'm curious why the word "selling" in my post shows as a link--I didn't put a link in my post and don't even know how to.

It is an advertising gimmick, explained at the top of the page where the list of threads appear:

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They claim you can opt out, but the opt out isn't working for me.

    Bookmark   February 25, 2010 at 4:59PM
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chispa

About 10 years ago my parents were living in NJ and there was a Pulte subdivision being built behind their house. My Dad and I would go take a walk through some of the houses as they were being built. I'm no building expert, but had done lots of research at that time because we had considered building. Both my Dad and I were amazed with the shoddy workmanship. Buyers would have no clue what was behind the finished product. They do have different project managers and crews, so you might be lucky to get someone who knows something and actually cares about their job ... buyer beware.

    Bookmark   February 25, 2010 at 8:31PM
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qdwag

Not meant to defend shoddy workmanship,but unless you are custom building,with KNOWN quality workman,you are likley getting only decnet to mediocre quality with ALL homes...It is NOT just major builders who do such

    Bookmark   February 25, 2010 at 8:37PM
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akrogirl

We used to own a Pulte home (our realtor still does), and it was actually one of the better built homes I have come across in the Phoenix area.

DH and I also checked out every builder around when we were looking for a new home. We looked at everything from regular tract homes to million dollar plus custom homes. Sad to say, just as qdwag wrote, there was no difference in build quality for the most part since the builders are all using the same, for the most part unqualified, crews. Sure, the expensive homes had fancier finishes, but the underlying framing was every bit as shoddily done.

    Bookmark   February 26, 2010 at 9:10AM
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