If you are planning a home, an appraisal based on plans can provide an opinion of value for the proposed property before construction begins. The opinion describes the home in the plans and specifications under the conditions stated in the report. It is not a promise of what the finished property will sell for.
The value is tied to a specific planned home
Plans and specifications identify features such as the home's size, layout and intended finishes. They let an appraiser analyze the proposed property as described, even though the home does not yet exist.
If the opinion is based on the home being complete, it addresses the property under that condition. It is not automatically the value of the vacant site as it stands today. Check the property description and the plans referenced in the report to understand which home the value represents.
Check the value date and the completion condition
Every value opinion applies to a particular date, called the effective date. That date answers “when?” The completion condition answers a different question: “What is assumed about the home?”
For example, a report can give an opinion as of today as if the planned home were already complete today. That is different from a prospective opinion, which uses a future effective date and stated assumptions. A report describing a completed home does not necessarily give a future value.
Look for the effective date and completion conditions in the report. If it is unclear whether the value is current or prospective, ask the appraiser to explain. The date the report was signed is not necessarily the date of the value opinion.
What the appraisal does not establish
Treating a home as complete for an appraisal is not proof that it has been built. It does not guarantee that the builder will finish on schedule or that the work will be free of defects. Verifying what was actually built is a separate question.
A value opinion is not loan approval or a guaranteed future sale price. Even a prospective opinion applies to a stated date and conditions, not a promise that a future buyer will pay that amount.
What if the plans change?
If you change the design or specifications, do not assume the original value applies to the revised home. Share the updated plans or change orders with the appraiser and, for a lender assignment, with the lender. They can determine what review or further work is appropriate. A change does not automatically mean the report must be replaced, and its effect on value should not be assumed.
Before you arrange an appraisal
Start with the decision you need to make and the property and plans involved. If the appraisal is for financing, ask your lender how its appraisal must be ordered and used before paying for a report. Do not assume a report you arrange yourself will be accepted for the loan.
Dirkmaat Appraisal offers new construction appraisals, including proposed construction from plans. Bree Dirkmaat is a Certified Residential Appraiser whose specialties include new construction appraisals based on plans. The firm serves areas including Harris, Montgomery and Liberty counties; assignment fit depends on the property and purpose.
To discuss your proposed home and the appraisal question you need answered, contact Dirkmaat Appraisal. Have the property location and available plans in mind, and explain whether a lender is involved. Dirkmaat can discuss whether the assignment is a fit and what to clarify next.