Appraisal at closing

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Submitted by LittleMissPiggy on August 24, 2010 - 1:43pm

I am in process of buying a new construction in Carmel Valley. I was a house that we like with some yard which is not common in CV area.
I like the house and feel that for us it is right time.
Price felt okay at that time. It was April and there was CA tax credit just announced etc. Long story short we got on to the wagon.

Since the construction started in April prices has come down in existing communities like Portico.
All my fellow buyers are nervous.
The builder is a corporation and we are going with builder's lender.
I have heard that the lender needs appraisal in order to lend on the house. The question is, if the house has indeed gone down since we sign the contract, can the appraisal still be high? I suspect it could be because the lenders and the builders are the same people.
I have heard that the builder will match the price if the appraisal came lesser then what they are asking for the house.

If the prices in the area has gone down now, I will feel pretty bad paying the price of April.

Does anyone have any experience in this?

I am up against a corporation, how do I protect my interests?

Submitted by all on August 24, 2010 - 3:41pm.

What does your contract say? Is there a cancellation/termination clause?

Has the valuation gone up would you be ready to pay more for the house?

Submitted by SD Realtor on August 24, 2010 - 6:17pm.

SOunds to me like you really do not have any recourse other then to wait for the appraisal. If you do not believe the results of the appraisal then you can pay an appraiser and they can appraise it but it is not likely that you have much recourse. That is always an issue when you buy a home with that much of a lead time.

One thing that you have not brought up is in that same timeframe interest rates have also dropped a good deal.

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Some builders may have some terminology that protects the value of your home with respect to the phases. That is, if subsequent phases with matching floorplans sell for significantly less then you may have some recourse but don't hold me to that.

This is the deal when you have a long lead time... Back in April the media told us the "recovery" was skipping right along and everything was fine. Now the media is telling you the sky is falling. The honest answer is everything was not fine then and the sky is not falling now. Things are bad and will be bad for awhile. If you really are super nervous and think things are going to really tumble then it is likely that the home you are buying now will be priced less then your deposit a few months from now. So bail and let the deposit go? Or hire an appraiser and see if that gets you anywhere. The problem is that if many of the homes in the phase close for price X then it will be challenging for an appraiser to price your home at price Y if you want Y to be much less then X.

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