Hello,

We have a builder who is going to be building several new single family homes in the same subdivision. He has three different floor plans. We had each floor plan appraised separately. As we begin to move forward with financing, the question came up about any proposed changes to those floor plans. For example, the builder has a customer who wants to build "Floorplan A" but had decided to finish the basement. The builder will obtain the construction loan. Here at the bank we have an appraisal on "Floorplan A" but it was done without basement finish. Can we use that appraisal as a "baseline" and then do our own internal valuation of the property to include the basement finish, per the signed contract/specs/plans between the builder and future homeowner?

Attached or Detached Single-family Homes

For proposed construction and sale of five or more attached or detached single-family homes in the same development, the appraiser must analyze and report appropriate deductions and discounts. Appropriate deductions and discounts should reflect holding costs, marketing costs, and entrepreneurial profit during the sales absorption period of the completed units. If an institution finances construction on an individual unit basis, an appraisal of the individual units may be used if the institution can demonstrate through an independently obtained feasibility study or market analysis that all units collateralizing the loan can be constructed and sold within 12 months. However, the transaction should be supported by an appraisal that analyzes and reports appropriate deductions and discounts if any of the individual units are not completed and sold within the 12-month time frame.

We have a builder with a RLOC. He only advances to begin his builds once he has a signed contract with a prequalified buyer. We require an appraisal be completed before we advance funds from the line. In many of the cases, the buyer came to us for the prequalification to purchase the home. Can we use the same appraisal for both the build advance and the purchase loan?

You own the appraisal, if it is a valid appraisal under your board approved policies, you can use it for what ever you want too.