Real Estate Appraisal Fees

Looking for answer to the question, specifically in the McKinney/Anna area. What is the average cost of a real estate appraisal for a new build, 2600 sq ft home? My son was quoted $700 for this, and had to be paid for up front, not at closing. Just wondering if this is a competitive price. Thanks.

Calling HoneyBeez....

Don't know on the amount, but up front is customary for appraisers.

Your post indicates your son is engaging the appraiser. Is there no lender involved? Is this a custom home or a production home? Sounds kind of high to me if it's a "to be constructed" appraisal and no inspection/measurements, etc. are required of the appraiser. In other words, the appraisal is based on plans. Most appraisals ordered by lenders are paid at closing. Need more details.

Kinda pricy if for a tract home - this guy averages $400 - https://www.bj-appraiser.com/Services

That is on point for pricing in the current times right now for that. I would go down there for $700 and get it knocked out but lenders have guidelines and procedures so that would not work unfortunately. Also, the appraiser gets paid his fee and then an appraisal management company who is the third party adds their fee onto that. The appraiser here is only probably making $550 or so and the AMC is taking the rest.

That makes sense. My son will have a 130k mortgage on a $450k home that will be finished by Sept 30th. The preferred lender of the homebuilder is requiring the $700 fee be paid up front. I haven't had a mortgage in quite a while, but I never remember paying up front, only at closing. Since there's so much equity in this home, is there any way to waive the appraisal totally?

There actually is and with the numbers you just gave me it may be and they will just settle it at closing if an appraisal is not completed. They take the money up front and it sits with the title company because I am on around a 60-90 day wait on orders completed.

Edit to add: They also are probably covering if they do have to have the appraisal and the appraiser goes out next week and completes it the house will need a final once it is completed. $550+$150=$700

My understanding as well. This is not far from you, in Anna, TX. Stonehollow homes IIRC.

We’ve seen as high as $1,000 during the craziness of last year. Strange thing is, I’ve seen more lenders waiving appraisals this year vs last year, and the market this year is unpredictable

It’s all a scam anyways. Had an appraisal come back today, he got the square footage exact based on the build plan and managed to unbiasedly put the appraised value at exactly the contract price. It’s amazing how accurate they are when they have all the information in their hands

You just described a desktop appraisal that he got paid $75 and decided to put his career on the line for. I am not that guy but they are out there.

I’ve heard of 700-1000 pretty regularly last several months.

We just paid $700 in the Weatherford area last month on our custom home. Ridiculous BS

sounds reasonable. in a lot of cases you are paying for the appraisal and for having it reviewed by a different company. However for a simple home build I doubt there is a review process.

Hell, I thought almost everyone on this forum paid cash for their homes

So, seriously......it's common in that part of the world to charge $700 for a $130k mortgage on a $450k home?

I would be more concerned about the September 30 finish date than the appraiser's fee. That's too fast for quality work.

I don't see what the $130K mortgage has to do with the appraisal. The lender wants to know what the house is valued at (appraisal documentation, which you are paying for), not what you think it will sell for ($450K).

It's been under construction for 5 months already and the Sept 30 date was suggested by the builder. I still fail to see the need for a $700 appraisal for a home the sells for $450k. According to my math that's $320k in equity the day he moves in. What's worse is that the mortgage broker is in McKinney, and if anyone should know the market that's right in their backyard it would be them, I thought anyway. Maybe I'm missing something.

Nope...........theyre crooks at this point............an appraisal should not be needed in the OPs loan.

When I was still building homes the appraisal was done before ever breaking ground, using the house plan and a semi-itemized list of the components that were going into it. In some cases a local bank may appraise it in house themselves. Five months into construction doesn't make much sense unless the project was going to go over budget or something was added to the plan. Even so, with the OP's high equity I don't see the need for the appraisal.

"Nope...........theyre crooks at this point............an appraisal should not be needed in the OPs loan."

An appraisal is a requirement if the loan is to be sold in the secondary market. Most are.

There's a couple reasons why it's being done on the back end. I for example can do mine up front off of plans, specs, and cost breakdown if borrower is carrying the loan and then do a recert and final for $250 to confirm home was built to specs provided. This is on my 1X close construction loans. If OP is purchasing final product from builder and builder carried the contsruction then a full appraisal is required by lender if going secondary market. Fannie/Freddie guidelines will most likely require an appraisal for it to be sold/serviced as someone else said, despite the LTV %. All of my appraisal waivers are exising homes.

Price is accurate unfortunaly for a new construction project. I've had them as high as $1300 for new builds on acreage.

Info is most appreciated fellas.

I just found out today that the people buying our house is paying their appraiser $1200. Good lord I’m in the wrong business as usual lol

We just had a house built. Paid $850 for two appraisals, one as proposed before ground was broken, one just before closing. Was a house on acreage in the county so not what pricing would be in a subdivision etc. paying upfront is typical.

Other than they made the number neither were worth the paper they were printed on, absolute junk.

I had a buddy that used to call them "fish wrappers" as in most appraisals done on an URAR form aren't good for anything except wrapping up fish in.

Buying a $450K house and worrying about a one time $700 bill. What a country we live in!

I was thinking the same when he made the OP.

Hey I’ll take all those 500-700 dollar checks yall don’t want!

That's how he's able to buy a $450k home with a $130k mortgage. You have good discretion/discipline in handling your money. Think about it.

I'll "one up ya"...no mortgage here, living the dream!

Yessir! Down to $36K on our mortgage and I ain't buying another until I retire. Everything is too overinflated. Everyone and their dog keeps telling me "sell and roll the money into the next, it's how you become rich"! Well folks, I'm a weird one because "rich" to me is good health, a fat 401K, an early retirement giving me all the time in the world to spend out here in the rolling plains, and NO MORTGAGE! The practice of buying homes as investment properties is slowly killing the way of life we know. It'll back fire one day. Nobody knows when, but it always does.

Amen PigMoney!!!! I hate debt in any form or fashion.

You don’t have to downsize when you retire if you never upsize.

Pretty sure I will end up living in a box ...I got almost as many mortgages as fingers and toes. Ya never know if youre living on the edge unless you fall off............odds are I find that edge..........oh well. Giddyup

I wouldn't want to be paying mortgage or credit card interest right now...eff dat!

We might not have to worry about it, everyone will be renting soon enough. Ought to be illegal:

[url=https://www.yahoo.com/finance/news/blackstone-prepping-record-50-billion-150000581.html][/url]

It ought to be illegal to buy rental houses?

Don't get me wrong I'm a middle of the road independent conservative that leans right, but at what point do we let capitalism completely ruin us? How long until the entire country is owned by the few? Look what China, Saudi Arabia, and Bill gates are doing. The Mesa Vista Ranch was almost sold to a Saudi Prince but 'ol T Boone said he would not sell it to a (insert derogatory term).

Let me know in the future when you visit him. I am about 2 miles north of his neighborhood on 17 acres in Grayson county just across the Collin county line. Currently building home and office should be moved in around January.

You are going to nestle in nicely up there by that soil conservation reservoir.

Sure will Mark. I'll look forward to it.

How much are appraisals on just the lot? Our city is selling us our leased lots but they have to be appraised and
Then we still have to negotiate the price.

I wish people would stop looking at their primary residence as an “investment”. If anything it’s a terrible savings account.

It'll backfire for the renters or the owners? People will always need a place to live....

I believe in DFW real estate.

Home in Hurst. Pd $108 about 20 years ago. House next door just sold for $440 after total remodel.

2 rent houses: Had both over 30 years since wife and I married.
One in Mansfield pd about $100k 30 years ago. Now worth almost $300k Rental
One in Hurst I paid $36k about 40 years ago. Now about $300k Rental

133 acres South of Bowie. Recreational property(junk land good for only fishing, hunting, 4 wheelering. Paid $408 per acre. Now, according to a realtor I know, is about $9 to $10k per acre.

All properties are now debt free.
Yeah, I believe I real estate. But, I have seen more than one cycle.

My daughter has a bakery in downtown McKinney, so y’all come visit. Limited hours, but if it’s open, she’s there. Bresnan Bread and Pastry.

IDK...the ones that I've bought and sold have done pretty well. Better than any "terrible" savings account I ever had/have.

Take out the past 4 years, those are an anomaly, and look at the lengthy history of appreciation of home value along with insurance, taxes, and maintenance.

If you simply lived in your home for 30 years and paid it off, with zero $ for maintenance, and it followed the typical 3-4% gain per year that would amount to $324,000 value, so a gain of $224,000. Subtract 2% for taxes over 30 years, let’s keep it simple and just say you only paid taxes on the $100,000, that’s $60,000 in taxes, now we are down to $164,000. Let’s use interest at 7% as that’s a pretty common rate over the past 30 years, that’s $139,500 in just interest, leaving you just $24,500. Still have to factor in insurance.

"Take out the past 4 years, those are an anomaly, and look at the lengthy history of appreciation of home value along with insurance, taxes, and maintenance."

Add in the fact that most people would spend that money frivolously which they are not spending on their housing and instead of investing it. Home ownership and its accompanying mortgages provide home owner discipline. Something too many are in need of.

Collaterally, it also instills pride in ownership.

Is there a difference in the cost of an appraisal on a new build vs. an existing home?

Should be because a proposed house should I Clyde two analysis as proposed and as complete.

Tell me about it paid that bill last night lol

Dang you BP!

You are paying for those property taxes and insurance whether you own your home or rent it. If renting, it is built into the rental fee. I know quite a few people that have rented the same home for over 20 years. They have been paying those property taxes, insurance and probably the owners interest on the note (assuming he had one) as part of their rent. The difference in renting and owning is the owner has equity at the end of the day and the renter is still at $0. There are better investments out there with discretionary income but you are paying to live somewhere whether you rent it or own it. Land owners are not losing money for you to live in their house.

Now think about it… if you hadn’t bought a home and were just renting you would have paid more money and been holding an empty bag at the end of the day. People rent out homes for income… that means the rent is greater than the cost of operation…

That’s like saying ag exemption is t worth anything because you don’t make much on hay or cows and completely ignores the tax savings.

Maybe that's the key. Don't keep it 30 years. Longest I have a kept a house is 6 years. I agree the last 4 years have been the anomaly for sure.

I’m not saying don’t buy a home, absolutely go buy a home. But the old adage of thinking a home is an investment is simply wrong. Like I said, at best it’s a poor savings account.

The average is 7 years. So you’re right there at it. Seeing as how you pay considerably more interest at the beginning of the loan than the end, it’s extremely hard to make any gains in 7 years.

If your current house has gone up $150,000 in the last 4 years that’s great, sell it and go buy another house, you won’t be dollars ahead though unless you make a drastic change in the home you’re purchasing. We built our house for $409k in 2017. We can sell it today for $759,000, pretty good return, but to replace this house where we want to live would be $900,000 so we would be in the hole. To replace it where we would settle for would be $700-$800k.

Here’s your 7 year numbers

You’ve paid off $10,000 of the loan, but over $45,000 in interest while only gaining $31,000 in “equity”

Absolutely it’s worth it. Depending on your goals with the property determines how you achieve that exemption and how you make it profitable.

That may be true, but I doubled my money on my home from 1998-2010, made 40% return from 2011-1016, and am up almost 20% from 2017-present. No savings account I've ever had came close to that.

Ive done good...........but my approach has been different

but have you sold it?

Fade, I'd love to learn about your strategy/approach. Feel free to PM if you prefer.

Oh Doc..........the time period has passed......unless they go to 100 year mortgages.

Im a precautionary tale

I think his post references two sales and he can sell the 3rd one later, whenever he wants, and still do well.

Gotta love the realtor telling us all how poor is the investment he sells.

Lol kinda what I was thinking. What other investment can you get that also provides you a place to live?

I’m all for investing in real estate, and there are tons of ways to do it. But too many people have grown up being told their home is their biggest investment. I think the term “investment” is misused and instead should be replaced with “asset” because if it’s not generating passive income every month, is it really a good “investment”?

Buy a second home or third home and let tenants pay it off while you collect a few hundred or more every month.

If I called you and said I want $4,000,000 in insurance coverage for my $700k home, would you just sign me up or try to educate me as to why that’s too high?

Generally investing on land you make no real return till you sell, so you can’t invest invest in land?

It might be investment you don’t like but that might be the end of it.

Huh? Can somebody translate? You’re talking like 2Beez

Don't you bring me into this. You made a [censored] show out of an appraisal thread. Color me shocked

Oh good, you’re here, can you translate whiteclaw jibberish?

You're sober, figure it out. I cannot but I think I have an idea of what he is saying maybe... lol

Earth to BP, there are many different classes of people. There are way too many who will never even purchase their own home. There is the next subset of people who will purchase a home and have nothing else. Then comes people with a home, and a savings account. Then some with a home, savings account and investments. Then there are people with generational wealth. People being told a home may well be their biggest investment is rather spot on.

Sophisticated erudite investors working multiple jobs and investing in White Settlement are a class of their own. Somes of them simply do not understand the rabble and how they get ahead. It appears at least one of these sophisticated, erudite, White Settlement investors does not seem to understand the opposite of buying a home is renting and that there is not an investment at all but a bleeding of the wallet.

Think about what you are saying. Maybe your son will always live with you while getting ahead in life without purchasing his own home.

I just wanna move. Actually, need to move. 'Love our lot. But it's a $#@% show next door, and gonna get worse when they die. Very few places to land in this buildup of the huddling masses, especially apartments, around me. Want to stay by the grandkids, but they will grow up and move off before we can blink an eye. My Achilles heel is I like nice restaurants (occasionally) and a decent grocery store. They don't put those in the country.

Land is an investment. Home is where you live. But I get what you're sayin'.

BP, don’t forget the benefits of favorable tax benefits when it comes to selling your home.

If you buy a good solid house at the right price/time especially in the right location it is a very good investment.


https://www.rocketmortgage.com/learn/tax-deductions-for-homeowners

8 Tax Breaks For Homeowners
The IRS has extensive rules about the tax breaks available for homeowners. Let’s dive into the tax breaks you should consider as a homeowner.

1. Mortgage Interest
If you have a mortgage on your home, you can take advantage of the mortgage interest deduction. You can lower your taxable income through this itemized deduction of mortgage interest.


In the past, homeowners could deduct up to $1 million in mortgage interest. However, the Tax Cuts and Jobs Act has reduced this limit to $750,000 as a single filer or married couple filing jointly. If you are married but filing separately, the deduction limit is $375,000 for each party.

2. Home Equity Loan Interest
A home equity loan is essentially a second mortgage on your house. With a home equity loan, you can access the equity you’ve built in your home as collateral to borrow funds that you need for other purposes.


Like regular mortgage interest, you can deduct the interest you’ve paid on home equity loans and home equity lines of credit. However, you can only make this deduction if you used the borrowed funds to pay for a home improvement. Prior to the Tax Cuts and Jobs Act of 2017, you could deduct the interest on these loans regardless of how you spent the funds.

3. Discount Points
When you take out a mortgage, you may have the option to purchase discount points to lower your interest rate on the loan. If you have this option, one discount point will equate to 1% of the mortgage amount.


If the points are purchased to reduce the mortgage’s interest rate, you can deduct the cost of the discount points. However, ‘loan origination points’ will not be tax deductible because these are fees that don’t affect the interest rate of your loan.

4. Property Taxes
As a homeowner, you’ll face property taxes at a state and local level. You can deduct up to $10,000 of property taxes as a married couple filing jointly – or $5,000 if you are single or married filing separately.


Depending on your location, the property tax deduction can be very valuable.

5. Necessary Home Improvements
Necessary home improvements can qualify as tax deductions. Of course, the definition of ‘necessary’ is somewhat limited. If you decide to upgrade your fully functioning kitchen, those improvement costs may not qualify.

However, if you have to make permanent improvements to make your home more accessible for medical reasons, that should qualify. A few examples might include installing medical equipment, installing railings or widening doorways for an accessible home.

6. Home Office Expenses
If you operate a business in your residence, you may be deduct some of the expenses of maintaining that space. The IRS requires that you use your home office for regular and exclusive business use in order to qualify for a deduction. If you only use the office space when it is convenient, or just for working from home for your employer, that will not qualify.


In terms of the deductions, the size of the deduction is based on the percentage of your home dedicated to the place of business.

7. Mortgage Insurance
Private mortgage insurance, or PMI, is another expense that many homeowners must factor into their budget. PMI is there to protect your lender if you are unable to continue making payments on your mortgage.


You can deduct your mortgage insurance payments on your itemized tax return.

8. Capital Gains
Capital gains tax breaks come into play when you sell your home for a profit. The capital gain is the difference between the value of the home when you bought it and when you sold it. For example, let’s say you bought your home for $100,000. A few years later, you sell your home for $150,000. With that deal, you would walk away with a capital gain of $50,000.


If you were using the home as your primary residence for 2 of the last 5 years, you could keep some profits without any tax obligation. As a married couple filing jointly, you can keep up to $500,000 in capital gains. As a single filer or married couple filing separately, each party can keep up to $250,000 of capital gains without a tax obligation.


The key is that you lived in the house for 2 of the last 5 years. With a big tax break on the table, it’s important to take this deduction seriously.

Unfortunately that’s the result of stone cold sober posting off a phone with fat fingers.

You said investing in a house wasn’t an investment because it didn’t provide a cash flow during the holding period. I disagree and offered an example why.

Personally, I look at everything I spend more than $1000 on as an "investment". How I evaluate the effectiveness of that "investment" depends on whether it has potential for appreciation, cash flow, or the "value" it provides (either intrinsic or extrinsic). From the "value" perspective, as an example, is it a necessity (like a vehicle with some intrinsic value), or does it simply make me happy (like going on vacation). Some things are good "values" (like guns) because they generally retain their value, a vehicle is less so, but for me, I still consider it an "investment". Some "investments" provide all 3, others maybe none. I feel like looking at things in that regard help provide clarity as to where I spend or "invest" money, while also considering the work it took to make the money.

For me, my home provides potential for appreciation, and has both intrinsic and extrinsic value. So it is not an investment in "cash flow", but it is still an investment to me.

Just my perspective.