James Yang

Danny Kelly, co-owner of Kelly McCardle Construction, in Charlotte, N.C., has salvaged two sales by offering the homeowners an alternative bank for their construction loan.

For one job, the original appraisal came in much lower than the project budget, so the home­owners decided to cancel the project. Kelly connected them with another lender. “That appraiser came in $160,000 higher,” he says. The homeowners had two things working against them in the original appraisal: the appraiser wasn’t familiar with the area — a rural location — and he wasn’t experienced with high-performance homes.

On another job where the home­owner received a low appraisal, Kelly spoke directly with the appraiser. “I explained some of the things we were doing, found a few errors, and gave her some comps,” he says. “I heard a week later that the clients were approved and moving forward.”


At the crucial point of closing on loans, Kelly says, loan officers who specialize in construction loans and home equity lines of credit do a better job than their peers. He generally sees more accurate appraisals from banks that choose their own appraisers rather than banks that bid out appraisals or use a lottery system.

27% of real estate appraisers and assessors are self-employed (2008) Source: Bureau of Labor Statistics: Occupational Outlook Handbook 2010-2011

“Most banks aren’t allowed to talk to the appraiser, but the appraiser will typically talk to the builder,” Kelly says. It’s especially important to educate appraisers about green projects, so Kelly provides details of his past green jobs, for a comparison. “If my house is 30% better, it should appraise for more,” he says. “These houses cost more to build.”

Also, if an appraisal comes in slightly less than the project budget, Kelly value-engineers the design. “We’ve gotten pretty good at massaging our specifications to give [owners] a good value and meet the bank’s requirements. We run this by the bank to make sure they agree with our adjustments.”

—Nina Patel, senior editor, REMODELING.