Yuck -- I'm sorry it's already so far along. The way it sounds, the process has put the appraiser in the position of having to defend his work, so now, instead of simply (and quietly) being able to say "Thanks - these comps are much better than anything I was able to locate" (in the 2-3 hours his $150 cut of the fee fairly compensates him for) --- Well, now he looks bad to his superiors and has to either eat crow or discredit your comps... At one point in my career, I used to do some commercial appraisal work related to a specific industry. For this type of appraisal work, in-depth knowledge of the industry was critical, and 'ordinary' appraisal knowledge was insufficient; so in the course of my work, we came across a number of grossly incompetent appraisals. Even though we could show how and why they were wrong, getting them 'ignored' in the minds of the lenders was exceedingly difficult. The lenders want the appraisal as a CYA document. So ignoring a low appraisal -- even if it's proved to be faulty -- leaves them vulnerable. If the loan were to ever go bad, anyone could point to that [bad] low appraisal and criticize them for making the decision to lend. Your best bet might be to switch lenders...

If it's being sold "as is" the appraiser will give you an "as is" appraisal meaning he/she will determine value of just what's already appurtenant to the site plus any materials not yet installed but present onsite & included in the sale. As example, maybe there's a stack of drywall in the garage or rolls of electric wire somewhere on site. You may also need an "as complete" appraisal if you're going to finance the finish work. If there are uninstalled materials laying around...be sure to inventory them & take lots of pictures (dated). Uninstalled materials frequently grow legs & walk away in the night! The bank should have secured them but, these days, who knows what they're doing...or not doing to protect the property. Also, ask the lender if the property is currently insured & for how much! This is very important. There are so many foreclosures today I'm uncomfortable saying this doesn't need to be asked. It 'should' be a no-brainer...banks have general liability policies to cover this type of thing but the loan officer in charge does have to remember to notify the insurer of the property's address within 30 days of the foreclosure. I'm completely uncertain that every property is making it onto the proper insurance list today. So...ask & you can sleep easier plus it 'might' trigger the darn loan officer that he/she needs to notify the insurer immediately of the property's existence! Would not be fun to lose the house to fire 3 days before you close...and empty properties are targets for bored teenagers, unfortunately. As "as complete" appraisal is performed for houses as per the plans & specifications. For instance, if you were building from scratch & needed to get an appraisal done for your construction loan. Obviously, there's not yet a physical house to appraise. So, the appraiser uses your plans & specs to ascertain value as if the home was completed. After you have closed the sale & start to finish the house...be sure to obtain your own Builder's Risk insurance policy. It will cover you in case the guy delivering the HVAC trips over his McDonald's cup & breaks his leg. Also, get lien waivers from everybody who provides materials and/or labor. If you have a construction loan your lender will assist with this process. If you'll be finishing the home with cash then it's totally your responsibility to protect yourself. In my portfolio, I built-out probably close to 90% of all houses than came to me unfinished. I GC'd them. I found it much easier to sell a completed house (and sold them for substantially more value to my employer...the bank) than it was to sell a half finished place. I'm a bit surprised they are selling it to you "as is". I guess banks are just so overwhelmed today & don't have the employee skills on staff to get the job done. Many times, I've been assigned the task of building out entire subdivisions...one had 450 unfinished houses! Yikes. It was in Rancho Mirage, CA. The day I first arrived on-site to take over as GC...I found 3' of sand blown into the houses. Oh, what a mess! Took me almost 3 years to get the last house sold but oh what a party the bank threw for me when I closed that last house! lol :) Ya know, you should ask Dave here on the forum about getting an FHA loan that includes funds to finish the construction plus the purchase price. I'm skilled at workouts but permanent financing isn't my 'thing' but Dave will know... /tricia

dave777, Your generalization that most agents do not measure thier listings is just not correct... at least here in Charlotte, NC. As a matter of fact, it is against regulations to take measurements from the tax records. I find discrepancies all of the time form comparing my measurements to what is in the tax records. And guys, again, you are also generalizing that all areas do not count basements as living space. As long as the space is finished to the same quality as the rest of the home, it is given the same value. We have many lakefront homes here, built on slopes with full walkout basements. These basements are still counted as sq. ftg. living areas in the appraisals.

Good correction, 5iveminutes. Still, the gap between current value and the real construction cost would have me very worried were I the homeowner. The gap would be uninsurable. Robin, I was surprised at the lot cost, too: a very nice house on a bargain lot in an area of $400k-$450k houses? Hmmmm.... My personal experience with lot prices.... I just bought mine this year. It cost roughly the same as EJM's. It puts the "rough" in "diamond". It abuts an "affordable housing" subdivision in an area rated "rural". It has a cliff in the middle, 2 catchbasins for street runoff, berms, and a 3 foot wide underground storm drain cutting diagonally across the lot. I can't build anything on top of the drains or berms. Buildable square footage? About 800. No carport/garage. Around here, a lot with buildable space for a family-size $400k house would be 3x that much.