What do you mean by wait for a different appraisal? Is the bank willing to ask for another appraisal? Were the comps used not really comparable to your house? Or do you mean wait until more houses in your area have sold so that there will be different comps? If the later, than how is the market doing in your area? Are houses selling? Are housing prices going up?

Try a different lender, preferrably smaller and local.

our construction lender is about as small as they come -- and they will lend 90% of appraisal whereas most will only do 80%...as far as wait for a different appraisal...more of just wait to see if anything else sells that is better than the comps that were used (one was actually described as inferior) the other two were somewhat in line with what we are/were going to build, yet construction wise were not close. the market is not good at all - very rural area - in the depressed south and the only houses that are selling at a decent price per sq ft are the 1800-2000 sq ft houses --- any larger houses are being sold at pretty significant discounts.

granted if we ever had to sell we would be in the same boat as my previous statement and would take a pretty hefty loss...but that has never been in the grand scheme of things

Your last sentence pretty much says it all and explains the bank's point of view - and that is part of the reason we are waiting a couple of years longer than we wanted to start our build. We'll be saving up for an additional couple years so that we can put down a larger percentage of the down payment in cash. We also own our acreage free and clear, but prices on existing homes these days are so depressed that building makes less and less sense in many areas (we are in SC). Regardless, we are still planning to build - it's just going to take a little longer to save up for it.

Money is as cheap as it can get, so you should weigh the costs of financing now vs. 3 years from now. Extra equity in 3 years may be offset by higher rates or higher cost of materials (reflected in the sales price), for example. We plunged back in December and the appraisal on the plans came back 100% on five acres in rural KY. Now, we have to wait and see if it holds to permanent closing in a few weeks!

Nonetheless, good luck and go with your gut!

Give your local Farm Credit a try. They work with Country Mortgages on the permanent financing side and they keep the construction loan in house on the Farm Credit side. We had the best luck with their appraisals. We are also in the south in a similar housing climate. I would also do everything I could to get building now with the interest rates are still low.

...to abdrury...what would yall have done if your appraisal would have come back in the 85-90% of true cost to build--- and that 85-90% included your equity in your 5 acres? this is the situation we are facing - it came in at 88% with about $40k of land equity included in that value...

...Farm Credit fella actually didnt even want to look at the loan which i was a little surprised at...

Where are you building in the south?

I personally expect the new reality for about 10 years to be needing 30% or more to build. There just is little reason to see the large house market rebound significantly in the next decade. And as it does, the building materials will increase so that it will take at least a decade for building to make financial sense in most instances (particularly rural south)

You have a situation where the pent up demand to sell is huge (I personally know lots of people). People have been "waiting to sell" since 2007. That pent up "demand" to sell will depress prices for a long time.

Just my opinion but I think waiting for prices to climb is a recipe for frustration. Waiting to save more money is a more reasonable approach.

We had a very similar situation when we built our home two years ago right about the time the real estate market was starting to unravel. We also had quite a bit of equity in the land and the appraisal still came in way lower than the cost to build our home. The appraiser even downgraded the value of the land.....the same week our assessor sent us a notice that our taxes were going up because the land value had gone up! We ended up financing the construction process through our builder and hoped for a better outcome for the appraisal prior to closing.We were, however, planning for the likely possibility that we would need to come up with more cash when the building process was done. The post build appraisal came in much higher and although it was still less than what it cost to build it was much more reasonable.

A few months ago we decided to refinance when interest rates dropped to 3% on a 15 year mortgage. In the 18 months since we had moved in, local real estate had stabilized and housing values had even seen a modest increase. Since moving we have continued to make some additional investment in our home which should have had some positive impact on its value but when we had our home appraised again for the third time it was LOWER than the first two appraisals done earlier and the comps were not even reasonable. We then proceeded to a local bank and had yet another appraisal done and that appraisal came in at the same amount as the second appraisal. The differences between the highest appraisal and the lowest appraisal were huge.....enough to make me realize how subjective the appraisal process can be. In our case finding the right lender and getting lucky on which appraiser was assigned to us mattered as much or more than local market conditions. Regardless, its a bit of a roll of the dice. Hope for the best but make sure you have plenty of extra money in reserves for Plan B.

granted I may be in the minority...but the appraisal was the last thing that I thought would hold us up in this entire process -- and now it will be the only thing. guess some could say lack of having $150k in cash is the gliche, but anyone else seriously looking into building needs to really evaluate the appraisal process before they get their hopes too high.

we have other options but we are in a situation were we almost have to build and like others have stated, with the cost of money/cost of materials continually going up, if you can somewhat afford to build these days, jump in.

thx for all the input