When you choose a home to build with Omega, you may wonder why your lender orders an appraisal before construction begins. In many cases, Omega requests an appraisal in advance so we can address a potential difference in value early - while there is still time to make changes. When an upfront appraisal is required, construction on the home will not begin until the appraisal is received. This protects you as the buyer as well as Omega.
Once the home plan, homesite, design selections, and total price are established, an appraiser can estimate what the completed home will be worth using the plans and specifications. The appraisal is an independent opinion of value, and it does not guarantee what the home will be worth when construction is finished.
Your purchase price includes the base price of the home plus the design options you selected. Some options add more to the price than an appraiser believes will add to the home’s estimated value. If the appraisal comes in below the purchase price, that difference is called an appraisal shortfall.
When an appraisal shortfall occurs, we will discuss your options before construction starts. You can reconsider your design choices and lower the purchase price, or keep your selections and cover the shortfall under the terms of your contract.
If you paid an upgrade deposit, it is part of your purchase price - not an extra charge on top of the agreed price - and will be applied towards your closing costs at closing. Your Omega team can walk you through how the deposit and any shortfall would be handled in your specific situation.
Finding out about an appraisal shortfall near closing could leave you with a difficult decision after your home has already been built. An early appraisal gives you a clearer picture of the cost before Omega breaks ground. It also helps Omega avoid building a home with a lot of upgrades before a potential appraisal shortfall is addressed.
Our goal is simple: fewer surprises and a clearer path forward for everyone.
Yes. An appraiser can estimate the value of the completed home using the homesite, floor plan, specifications, design selections, and comparable home sales.
If necessary, the appraisal is requested after the home’s plan, selections, and purchase price are established, but before construction begins.
Your financial lender is who actually orders the appraisal. Omega Builders simply requests that the lender places the order.
When an upfront appraisal is required, Omega waits to begin construction until the appraisal is complete, and the result has been reviewed.
Your lender must order the appraisal, so we work with them to get that process started as early as possible. This gives us time to address any difference between the appraised value and purchase price before building begins.
We’ll review the result with you before construction starts. You may be able to revise your design selections to lower the price, or keep your selections and cover the difference under the terms of your purchase agreement.
No. An appraisal estimates the home’s value. A home inspection evaluates the condition of a home. One does not replace the other.
Not necessarily. An appraisal reflects the appraiser’s opinion of value at the time it is completed. The purpose of ordering it early is to identify any potential value concerns before construction begins.