Without going into the entire story, there is a large builder who has an affiliated lender who inputs an amount above the appraisal max (purchase price plus maximum percentage increase for the market to account for upgrade options chosen) for the property and elevation chosen as the Sale Price on the LE. Normally, in a purchase transaction of an existing home, you will put the lower of the purchase price or the appraisal amount. In a building situation (large developer), one would think it would be no more than the appraisal max for the current property and elevation chosen. This particular builder puts an amount above the appraisal max to account for possible elevation, lot, or community changes that may or may not occur. This sounds incorrect to me. Are they allowed to do that? I would have thought it must be the lower of the appraisal max or overall purchase price...and specific to what is currently in the contract.

On the purchase transaction, the sales price is the sales price, It should be whatever is in the contract for sale. Any appraised value is meaningless on a purchase transaction for TRID disclosures. Plus, what is the builders involved in the loan transaction?

KB Homes, and the lender is KBHS Home Loans of which they own half. The loan officer said they added a little bit just in case the elevation, lot, or overall community were changed...but that isn't true to what actually was in the contract. They calculate the appraisal max to be {[House Elevation Price + Market Allowance for Options/Upgrades (Ex. 8% of House Elevation Price)] + Land Purchase Price/Premium}. In the end, they added 2-3K as a cushion for the Sale Price on the LE to account for what may never happen. As I see it, they should never go higher than the forecasted Appraisal Max on the LE. If the purchase price ends up higher, you will come out of pocket. If it is lower, well, it's lower.

A sale price and an appraised value has no correlation. You are talking about the sales price disclosed on the LE, right? That has nothing to do with any appraised value.