We have seen alot of new construction in our area and that is fantastic. There has been such a lack of supply and therefore a high demand for new homes, that the frenzie is causing a problem when it comes to Appraisals
I am finding that lately buyers are OVER UPGRADING their homes, more than the typical market will bear. The builders should have something in their contracts that say they can guarantee the appraisal for the BASE price of the home, but not for upgrades! Some builders are doing this and they are smart to do so.
It becomes very easy for a buyer to get caught up in the process and add many more upgrades to customize their new home. However, the MARKET will not typically pay dollar for dollar for these upgrades. We have to consider the bank's risk and if the home were to be taken back even within a short period of time, they would not be able to sell these homes close to the agreed upon sales price of the home in question. These homes are "customized" to the specific buyers tastes and not all buyers would pay for these upgrades.
So please beware that when your buyer is upgrading to the max on their new home, there must be recent sales to support such upgrades in the market place. Thanks for stopping by!
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