How Is New Construction Appraised? 

New construction homes are often highly desirable—who doesn’t want brand new amenities, appliances,  and surfaces that have never been used by another family? Of course, before you purchase a new construction home, it’s important to understand how the appraisal process will work and the factors that the appraiser will consider during the process. At Allstate Appraisal, we have experience in new construction appraisals and are happy to answer any questions you have. In the meantime, here’s an overview of how new construction is appraised—

Appraisal Approaches Used

It can be difficult for an appraiser to appraise a home that hasn’t yet been constructed! As such, there are a couple of different methods that the appraiser may employ to determine the value of the home. These include the following:

• Sales comparison approach. Relying on building plans and other documents provided by the builder to get a strong sense of things like size, building materials, amenities, etc., the appraiser may use the sales comparison approach to make a determination about the value of a new construction project. This approach is based on identifying comparable home sales in the same neighborhood, including sales of similar homes from competing builders. 
• Cost approach. The cost approach is another straightforward way of appraising a home that hasn’t yet been constructed. The cost approach simply takes into account the cost of the land combined with the cost of construction minus the cost of depreciation. 

To determine overall value, the appraiser may take into account both approaches.

Information Considered During the Appraisal

During the appraisal process, the appraiser will require multiple types of information from the builder, especially if the new construction home has yet to actually be constructed. Types of documents and information that will be requested include building plans, spec sheets that describe the specific materials that will be used in construction, a cost breakdown analysis, and a plot plan that outlines the surrounding properties, utility lines, accessory buildings, and more. 

Obviously, if the home has already been constructed but not yet lived in, the appraisal process will be more straightforward and follow a typical residential real estate appraisal process. 

Contact Allstate Appraisal Today

If you’re thinking about purchasing a new construction property and need to get an appraisal before your lender will issue your loan, call our team today. We have experience with new construction projects and are confident in our ability to help. Reach out to us by phone or online with any questions or to get started.