Here we are again, the point where we could easily walk away from this house and never look back. The bank has delivered the bad news that the home didn’t appraise as we all thought it would. The appraiser evaluates the land and the home plans to come up with a combined value of the future property for the bank to decide if it can loan safely. For a bank to want to give a loan, a property needs to fall in the average range of others in the area. Our property was appraised to be more expensive per square foot than other new, single-family construction in the area. There are few reasons for this, and before we give up, we are exploring the issues and possible solutions with our designer, builder, and the bank.
So, here is part one of our failed appraisal: square footage.
95% of the new construction in our area are townhomes that don’t qualify for the “single-family” category required for the appraisal, even though these townhomes may be selling for more than single-family houses, even more than ours will cost. This really can’t be changed, but we’re hoping that our home and the other few new ones in the area spur more new houses to make things balance out someday.
The 5% of new construction that qualifies for single-family dwellings in our area are being built huge, like most other new construction in the U.S. Our future home is purposefully small, just over 1400 square feet with our studio and guest suite added in. We wanted to keep the new place small because we have lived comfortably for years in our old 1200 square foot home, and we’ve never really seen the need for much more space that we wouldn’t use, but would have to keep clean. However, the bank says that to keep up with the homes in the area, we would benefit by 300+ extra square feet to our design.
Seems crazy, right? A larger home size makes the price per square foot shrink. So, at 1400, a home may be $150/square foot, but at 1800 it would be $118/square foot. The average price per square foot home in our area is $125, so that totally puts us in range.
And it gives us more space. Do we need or want the extra space? Not necessarily, but maybe it makes sense in this case. Our designer has proposed adding an extra shipping container to our current design (a 45′ container is 360 square feet). She would add it to the back, so that the kitchen, dining/living room, and office all double in size…check it out:
A walk-in pantry and closet and a real laundry room? I could be down with those luxuries! Yes, we’ll need a few more piers under the container, and we’ll need more roof overhead, and more sheetrock, but this isn’t all that more expensive for the amount being added.
Of course, this is just a proposal, and formal numbers need to be run and an engineer needs to be consulted first. All of this would also have to go back to the city for re-approval, but it is a possible solution. Are we ready to consider stepping back and redesigning again? That’s a big question. It depends on our land value…part two of our failed appraisal: the land coming soon…