Hardwood floors, upgraded cabinets, and granite countertops are very popular upgrades with new-home buyers, and they’re more than willing to spend the money to have them in their home. But builders are finding that appraisers often are not giving value for these items. Baughman says that when he has problems with low appraisals, it’s usually because buyers have loaded up their house with luxury choices.
When buyers select these options, he makes sure they understand that it could cause a problem with the appraisal. “If the appraisal comes in low, we ask the buyer if they would like to make adjustments or pay for them in cash,” says Baughman. “Sometimes we meet them in the middle.”
Some builders also are taking the route of requiring buyers to sign an addendum to the contract that says they can’t cancel the contract or request a reduction of the price if they choose those options and the appraisal comes in low.