Your customer will first become pre-qualified for a mortgage to determine their buying level.

Through the decades, Eagle’s Nest has developed relationships with many national and regional lenders willing to offer construction and permanent financing to our buyers.

IndyMac Bank is a leader and one of our most valued lenders. Our lenders view your business opportunity as a profit base for them.

When your customers work with one of our lenders, Eagle’s Nest will not be paid until the house package is delivered to your customer’s site.

Your retail price for the package will be in the lender’s line item, which means your profits will be collected by Eagle’s Nest and returned to you by Eagle’s Nest.

Financing will be directly related to the appraisal.

The following is from Craig Johnson, former Senior Construction Loan Specialist for Wells Fargo Bank on the “Builder Assisted” Program. Mr. Johnson has decades of experience in the Construction / Permanent Lending Industry.

It is a pleasure to contribute my thoughts to a project of this sort. As an active participant in the construction-lending marketplace over this past decade, I have seen thousands of construction loan applications cross my desk, and have had many more conversations with families who were considering building a new home. Over the years, I have heard impressive arguments in favor of the concept of owner/builder lending, and have heard equally impressive and compelling arguments against the idea. In the last five years, I have participated in national builder lending in key sales and sales management positions for a number of large construction lenders, and have come to some conclusions in this arena which I have been invited to share in a number of forums.

In this book, I have been asked to share my thoughts about why the “Builder Assisted” program as developed by Eagle’s Nest Homes is an attractive niche for families who may be mulling over the “risk/reward” variables involved in choosing whether to build a home with builder participation, or, to instead hire a general contractor to build as a turnkey proposition.


I have often expressed arguments that limit the desirability of approaching the construction of a new home as an “owner/builder” or as the customer of a turnkey general contractor. Both methods require much more thoughtfulness and care than many customers are willing to invest.


When this very question was raised to the management of Eagle’s Nest Homes in a series of thought provoking meetings, they were addressed as part of an ongoing business plan. Can we combine the advantages of owner built and builder contracted while eliminating the major risks inherent in each? By answering these questions in an organized step-by-step series of solutions, the Eagle’s Nest “Builder’s Assist” program was born. Here is how it works: The “Builder’s Assist” program combines hiring a general contractor and acting as a self builder so that each component does what it does best…limiting risk on one hand and saving money while maximizing freedom of choice on the other.



These services are contracted on a cost per square foot basis. The Eagle’s Nest house package is delivered from its factory, where as much of the home as possible is preassembled and panelized. It is incumbent on the general contractor involved to use his subs or his own employees to accomplish the services spelled out…thereby freeing the customer from the onus and frustration of finding subs to bid this work for him. The contract is binding as to cost, time and scope of service and the price per square foot to build and install represents the first phase of the contract. The second phase of the contract changes the nature of the general contractors work from primary responsibility to collaborative responsibility in concert with the customer.

The owner/customer has the price of the house package from Eagle’s Nest and the cost of its completion. He also has an assured flow of sub contractors because of his contract with the general contractor. Eagle’s Nest had enlisted the aid of Lowe’sÒ Home Improvement Warehouse, so that, on a one stop basis, the customer can choose from a fine array of options within his price range to finish his home. More importantly, Lowe’s or Home Depot can transmit to the lender the total cost for these purchases in the stages needed for completion, so that the bank can reserve the cost for each item within the loan.

With the cost printouts from Lowe’sÒ in hand, the Eagle’s Nest house package cost computed by the sales rep, the general contractors cost as specified in his contract, and bids from the subs provided by the general contractor to finish the remaining portions of the job, the customer can now safely predict the accurate cost for his project. The initial phases of his home will be done entirely by contract, which minimizes time and on site commitments for the customer who doesn’t even have to take time from work as these phases are completed. Because the material and labor are removed from his direct control, the likelihood of the customer shooting himself in the foot with a “change on the fly” is reduced to a very low order of probability. The home he selected is the home that is going to be built. But, from the dry in stage forward, the customer is truly empowered. He can choose whatever construction variable meets his budget in whatever configuration. He can spend more in one area and correspondingly less in another so that his overall budget remains in balance. He and his family are the sole factors in determining which product will be purchased. Consistent with this freedom…he and his family are solely responsible if the product chosen fails to please after it is installed.

For the most part, the builder accepts his role knowing that it comes with two enormous advantages. First, he is not required to put up a dime of his own personal funds or credit. He is erecting the Eagle’s Nest house package as bought and delivered to the site by the customer. Further, the material and the scope of his labor are paid through the construction loan arranged by the customer, according to the draw schedule contained therein. Second, he is getting the most valuable asset he can find…a customer, without spending a dime directly or indirectly to find him.

One of the safeguards adopted by the “Builder’s Assist” program requires that A RESERVE BE PUT INTO THE LOAN OVER AND ABOVE THE COST PROJECTION TO BUILD AND WITHIN THE CUSTOMERS BORROWING POWER. In other words, this safety valve must be identified and contained in the loan itself as an insurance policy against the vagaries of “Murphy’s Law”. Further, the more limited the customer’s ability to deal with “Murphy’s Law”, the greater this reserve must be. For the lender, this is an invaluable consideration…that the customer realizes unforeseen circumstances can drive up even the most well conceived plans. Contained within this realization is the budgetary restraint to leave, within his pricing, sufficient room so that if an unavoidable up charge is required, not only does the money exist within the loan, but also the customer has already qualified for the funds…the inclusion of a sufficient reserve all but guarantees that the customer will finish his home safely.

At the same time, the reserve may provide an excellent opportunity to the customer should he find that his budget was accurate to begin with and that the additional funds contained within the reserve were, indeed, superfluous to the construction. In this case, the owner/borrower is left with two pleasant alternatives. He can elect to return the reserve to the lender, thereby reducing his final mortgage to the dollar amount truly represented by the building costs, or he may instead have the reserve paid to him in cash, when the construction loan becomes a mortgage. In this case, the owner/borrower will retain the mortgage amount that would have existed if the reserve were used. He will have less equity, but, in its place, he will receive a check equal to the unused portion of the reserve, that he may use in whatever fashion he deems prudent.

This then is the “Builder’s Assist” program as developed by Eagle’s Nest Homes. It is a plan that combines safety and maximized the potential for equity. It affords their customer the peace of mind to know that their project has real safeguards to protect against serious mistakes, regardless of their origin, while at the same time allowing for the greatest possible flexibility in his choices. It is a program that should have much greater appeal to the lender than the alternative of leaving the owner/builder responsible for all phases of his project. Even the general contractor can endorse a plan that gives him a low risk, low cost customer. It is a win…win…win program.


When contemplating new construction as an alternative for their families, many customers ask if the salesman’s contention that the home will appraise for more than its cost is true. In many cases my response is yes, but often for a different reason than the builder claims. When a home is appraised to determine its market value, whether or not the home is new construction, the value assigned it by a competent appraiser has nothing, whatsoever, to do with its cost. Some customers bristle at the thought that their time and effort is of little consequence in the process of determining the new home’s value, especially if they are competent to do some of the actual work themselves. But there is a vast difference between reducing cost and determining value.

If value were a function of cost, then a 2000 square foot home in a good neighborhood in Buffalo, New York would have the same value as a similar home located on the ocean in Naples, Florida. Realtors, who help set the price of homes for their listing customers will tell them over and over again that value is a function of “location, location and location.” To a lesser but still considerable extent, the economic strength of the location, at the time the property is listed for sale, also has a great effect on its actual selling price. Employees of oil companies in Houston, Texas, or California aerospace employees during the 1980s can attest to the truth of this variable. If an area’s economy is extremely depressed, the value of homes, as reflected in their resale price can be drastically reduced. When that happens, new construction ceases altogether, because the builder’s know that they can’t sell their properties for even the wholesale cost of their construction.

Finally, a glut of similar homes on the market, even if the glut is purely coincidental, can have a dramatic, discounting effect on the price of all the homes for sale. Likewise, when a paucity of homes are for sale, as evidenced occasionally in “boom” town locations where major new industries have blossomed, the reverse effect is true. Just ask a citizen of “Silicon Valley” near San Jose, California to reflect on the value of even modest homes. Their prices have literally skyrocketed, not because of the quality of the homes themselves, but because there are dozens of well qualified prospective homebuyers eager to pay a substantial premium for every home that comes up for sale. Of course, not every region can boast a “boom town” situation like Silicon Valley. But generally even very slow growing Midwestern cities, rust belt cities like Cleveland, Ohio or Detroit, Michigan have, within their suburban extremities, communities where the value of real estate is astonishingly high.

Some customers are unfazed over these issues. It is because they don’t choose to value their residence as an investment where it is necessary to “maximize shareholder value.” And in many ways I agree with their thought process. Fundamentally, housing is a human need. Everyone has to live somewhere, and regardless of where they live, there are true costs associated with the occupation of the residence. I refer to these customers as “long termers”, because everything about their thinking is long term.

The first way I gauge the importance of increased value in the customer’s profile is to determine how long he intends to live in the new home. Customers, who perceive their prospective purchase as short term, are much more likely to have maximized value at the top of their list than a customer who intends to live out his days in his home. The long-term buyer can be self-centered in his thinking. He can choose a floor plan that is more suited to his particular taste and lifestyle because he’s not planning on selling, at least not for a very long time. I’ve had many customers who are essentially uninterested in their new homes appraised value. They are buying the home to live in and in a very real sense, to die in as well. If their home is short in appraised value, they simply make up the difference with a larger down payment from their personal savings. These customers evaluate the home based on how its usefulness bears on their ownership…. not on how the desirability of the home affects a prospective buyer.

The short termer is the buyer who is raising the question of value. He wants something different than the long termer. He wants quick equity…and may be building, as opposed to buying, because he is convinced that building is a surer path to increased equity. For many of these customers, the theoretical increased equity is meant to be used in another home later on, although there are certainly many useful purposes for increased equity. What’s more, his whole approach to the home may be to increase equity. Yet, in many cases these buyers do exactly the wrong things when it comes to building with profitability in mind.


My insights into the value of new residential construction come from reviewing thousands of appraisals, ordered by the lender, and paid for by the borrower, as a condition to granting the construction loan. The bank requires the home to be worth at least as much as the purchase price. In order to protect itself, it orders an appraisal of the home. But, wait a minute… the home doesn’t exist. How can a lender determine the value of a non-existent home? The answer is that the house does exist… as a one-dimensional drawing in the blueprints. A trained appraiser can review the blueprints, and the specifications that summarize the details to be installed in the home, together with the land on which the home is to be built, and accurately judge the market value of the home. He accomplishes this valuation by comparing the home to be built, feature for feature, with substantially similar existing homes in the same neighborhood, that have sold within the last six months.

As very few homes are identical as compared, the appraiser uses a plus/minus system to approximate the value of one home relative to the other. A home with three bedrooms will get less value relative to a similar four-bedroom house that recently sold in the neighborhood. A home’s brick façade will be judged as more valuable than a similar home whose façade is vinyl siding.

A curious sidebar to this discussion is that the appraiser is not concerned about the home’s cost, as represented in the builder’s contract, at all. Nor is he concerned by the building cost of any of the existing homes he is comparing, when they are new. You should also note that he cannot use in his comparative values, a newly built home as sold by a builder to his customer. That home is not considered as a reliable benchmark of value until the owner sells it to somebody else.

As there are literally hundreds of potential variations between “similar” homes, the professional appraising community has, in place, well established guidelines that allow each appraiser to apply the same plus/minus weights when evaluating a home. If five experienced appraisers evaluated one home, and arrived at substantially different valuations, then each appraisal would be worthless as a guide to the correct valuation. Fortunately, that is not the case. Each appraiser can look at the differences, use the same guidelines for adjustments, and arrive at nearly identical conclusions. When studying these plus/minus adjustments, it’s not hard to see which differences are worth more or less money.

Most customers, who shoot themselves in the foot, do so by building a home that is out of conformity for their neighborhood. This means an exterior façade or shape that doesn’t fit in, or fewer bed or bathrooms, or no garage when everyone else has one. Two bedroom single-family homes are almost certain to be low equity propositions. They simply will not attract a mainstream potential buyer. The customer who opts not to build a garage may be fine in the south, but, in the north, where it snows, a home that has no garage will simply be passed up. When you are building in a tract development that has a certain look, and an easy to define average home, you are asking for trouble to go against the grain. Remember this isn’t a beauty contest, this is maximizing resale value. The average purchase price in such a development should be fairly easy to ascertain. Any home that deviates too high or low from the average price will be a white elephant. And if you have to deviate, it is much safer to do so on the low side.

Simply put, most customers, who fail to maximize equity, do so because they overbuild. There is a temptation to include more than is necessary to make the home pleasing to a prospective buyer. If every other home on the block has vinyl flooring and yours has wood and ceramic floors…. that flooring will not create equity…. it will lose equity. The home may sell faster if it is in competition with another house down the street, but it won’t sell for more money. The same thing is true for finished basements and attics. Some customers spend a fortune making their basements into additional living space for their families, and are truly shocked when the appraisal community fails to show that space as contributing substantial equity to their homes. “Luxury” amenities fall into the same category. Don’t count on your Italian Marble foyer, your granite counter tops, or your ground source heating system to fund your retirement, especially in neighborhoods where those features are not commonplace.

What does add to the value of new construction? The three assets all appraisers will agree on as having universal value are square footage, bathrooms, and bedrooms. Let’s examine how each factor contributes to equity.



There are many other choices a customer must consider when building, many of which will compete against each other for the customer’s dollars. Although the three factors above must always be considered there are many others that might also be valuable from house to house. For these options, the home site location or nature may be compelling. A few examples might be revealing.



These energy and conservation issues represent a clear dividing line between short and long term ownership planning. The couple that plans to retire in the home is much more likely to consider the long-term savings that these alternatives will eventually offer. The short termer is not likely to offset the increased cost with the attendant monthly energy savings. He’ll simply be gone before the increased investment is recouped from monthly savings. What he has learned at time of resale is that the marketplace will not pay a penny more for these features. That’s why the appraisers don’t value them higher…and that’s the lesson I want you to learn.

Please understand that I am by no means advocating “stone age” building processes. But today, a curious tension exists between forward thinking builders and architects, who have incorporated energy and maintenance saving components into their designs, and the appraising community, who do not recognize any value implicit to these design changes in the actual marketplace where homes are bought and sold everyday. Until they do, you would be wise to invest your discretionary home building dollar in some other upgrade.

Another misunderstanding that exists about energy efficiency is that lenders are more willing to regard a borrower’s profile generously because a home is energy efficient. This is no such reality. Lenders are no more apt to grant a loan because a home is energy efficient. In fact, a lender will generally be more favorably disposed toward a larger home with standard heating and cooling. THE TERM “ENERGY EFFICIENT MORTGAGE” MEANS NOTHING. In fact, conventional mortgage lenders do no seek to determine the expected energy costs per month as part of the loan approval process. The questions are not asked, because the answers have nothing to do with their approval decision….

I think that most customers think of the appraisal process in exactly the wrong way. An appraiser, operating free from pressure to arrive at an arm’s length and meaningful opinion about the value of your prospective project, is rendering a service that is far more valuable than the approximate three hundred dollar plus fee he is likely to charge for his trouble. His opinion should be regarded as a traffic light, for the lender and the customer alike. If it supports the value as in excess of cost, then the light is green and the lender will be much more comfortable granting a loan. After all, he now knows that in the worst case, where the property must be sold, there is sufficient market value to cover the mortgage. The homeowner knows that he can anticipate getting a positive return for his time and trouble. On the other hand, an appraisal that considers the value of the project to be lower than its cost should function as a red light. The homeowner should review his project and make either appropriate adjustments, or inform the builder that his bid for the work is not supported by the appraisal report. Customers who pressure the appraiser about his report just don’t get it. They are confusing cost for value, and, are deluding themselves that breaking the appraiser’s arm in the hope of getting a higher number is somehow going to help them. I would much rather see the customer fold his cards and go back to the drawing board than to move forward in light of a borderline appraisal.

Customers should also understand that if the cost of the project is $200,000 and the appraisal matches it dollar for dollar, then they are going to lose money. Why? Because they are going to have to pay closing costs for the construction loan, and then interest on the draws during the course of the homes construction. If the home can be completed in eight months, then these costs alone will approach $5,000.

On the other hand the customer that uses the feedback generated by the appraisal in a positive way has added a very important tool to his decision making process. He can sit down with his appraiser, go over his plans in detail, and use him as a sounding board to select one amenity over another. By doing this the customer can assure himself that he is getting reliable input about how to proceed before committing himself to proceed in the first place. In every other real estate purchase the customer’s choices are to take it or leave it. But in a pre-construction meeting the appraiser can give the customer meaningful insight into what amenities can maximize resale value based on the actual local market, and statistics about home sales right in the neighborhood. Additionally, there is no self-interest in the appraisers’ recommendation because he does not benefit from whether or not you proceed. He may be the only player in this process who can truly make that statement. Everyone else has a vested interest in you moving forward except him. His services are strictly limited to his area of expertise, and end once he renders his considered opinion.

To make the appraiser’s job easier, he has to know what you are proposing to build. You must present him with a clear blueprint that shows the exact house, after you have made design changes, and you contract with the builder. If you show him a generic plan that is what he is going to appraise. Your valuation can be unnecessarily low if he is looking at a plan before changes were made, and in the absence of the builder’s contract. A few years ago, I had a customer complain to me about the ineptitude of the appraiser, who clearly failed to appraise the project at a sufficient value to please. When I got to the bottom of the issue, I learned that the customer’s blueprints, purchased from a magazine, failed to show any basement, let alone the walk out, full daylight lower level, planned to take advantage of a beautiful naturally sloping lot, together with a combination of patios and decks. When the appraiser was given the correct plans, his reevaluation increased by over $50,000, more than enough to warrant moving forward.

Next, he is going to need to know where you propose to build. You must provide him with either a copy of your land purchase agreement, or, if the lot is already owned, a copy of the deed. Finally he needs to know what amenities you are planning to install. If you don’t tell him otherwise, he will assume you are building at “builder’s grade”, which is a minimum standard of quality. Remember, some of your choices may be upgrades from “builder’s grade” and will therefore support higher values. But, once again, if the appraiser is not informed of your air conditioning, he can’t include its value in your report.

Remember that the first detail the appraiser will look at is the location of the land. It may be the most beautiful home site imaginable, with glorious views overlooking breathtaking waterfalls. But if no nearby real estate has sold recently then the appraiser is going to have a problem. The lender is going to demand recent comparative sales to justify the value of the project. No amount of creativity can obscure the fact that it is impossible to gauge the value of real estate in an area where no real estate has sold. One of the first requirements of land you are considering must deal with this issue. Has any nearby land recently sold? If the seller or his realtor cannot answer that question to your satisfaction, then you must either move on, or expect, from the outset, a lower property valuation.

Occasionally, I meet families who have received land from a relative as a gift, often from part of a larger family farm. In one such meeting, the young couple informed me that their land parcel was worth at least $7,500 per acre, and that the gift they received was five acres. Now, my activity is in a national marketplace. I see land valued at anywhere between $1,000 and $1,000,000 per acre, but often I am unfamiliar with the specific area where the customer’s land is located. All I really know at this point is that if the family’s estimate were true, they would have a $37,500.00 down payment available in the form of existing lot equity. When the appraiser inspected the property, he learned the land was, indeed, part of a family farm, in an area where no land had sold, except through the family, in two generations. Further, this particular home site had no road frontage. Its only access was on a 5,000-foot dirt road running through grandpa’s cornfield, for which there was no easement. The land had fair market value, but certainly closer to one tenth that estimated by the couple. But more importantly, what prospective buyer, outside the immediate family, would ever consider buying the home in a resale context? And as a result, what resale equity can this family honestly expect? I would be true to say this family could build a nice home with fewer dollars because of the gift of family land. But when it comes time to sell, on what basis should they expect to recoup just the lower construction costs they invested when the home was first built?

Up until now, we have discussed building concepts that tend to negatively affect the appraised value of your proposed construction project. On top of the actual cost projections, we have added to the cost of construction a “Murphy’s Law Reserve”. How then can anyone ever represent that the appraised value will exceed the cost. Simply put…don’t ever confuse cost for value. That’s right. If it can work in the negative case, it will also work in the positive one. If a customer buys a lot in a desirable neighborhood, chooses a home plan that fits the marketplace, and does a good job controlling his budget, then there will be a high likelihood that the value of the project, as determined by the appraiser, will exceed its cost….and sometimes exceed its cost by a considerable percentage. Some skeptics will be tempted to say, “How can we have a building cost of $250,000 and yet have an appraisal value of $310,000?” The answer is that the builder’s cost is irrelevant. The appraiser shouldn’t even see it, as it is not germane to the home’s fair market value. Besides, the builder’s cost isn’t $250,000. His price is $250,000, which is totally different. Tract builders understand this reality better than anyone. Tract builders own the land, often an entire development, build the home, and then offer it for sale as a finished product. Before they put a shovel in the ground, they have the appraiser look at the plans and suggest its market value. They will then price the home accordingly. Once again, their actual cost has nothing to do with the end price, which is set according to the appraiser’s estimate of fair market value. When you buy any product in the marketplace, your price has nothing to do with the cost the wholesaler pays for the product, or for that matter, the price at which he sells it to the retailer. No, your cost is based on the price that retailer marks up the product before he sells it to you. Believe me, suppliers and builders alike have no qualms about marking up the product.

But in a more important and fairer sense, they are entitled to profits. Any reseller, whether it’s a builder or a wine merchant, earns his living and pays his expenses by delivering his product to his customer at a price higher than he bought it. For some reason, this simple truth eludes us when we talk about home construction. All the suppliers and tradesmen involved in the process of building your home do so for profit. In order to profit, they must sell their project or trade to you at a higher price than its cost of acquisition. I am constantly surprised by customers who are indignant over the fact that they could buy the same products specified by the builder at a lumberyard for the same or lower cost. I always reply, “of course you can”!!! If you have sufficient cash, time and competence, you could build the house for considerably less than you are being charged. In fact, in that case you wouldn’t need me either, and could avoid the mark up on the bank’s money as well as the fees the bank charges. In that case, you would become a general contractor, because that’s exactly what well-healed general contractors do….build the house with their own money at the lowest possible price, and then sell it to you. THE OVERWHELMING ADVANTAGE THAT KIND OF BUILDER HAS, IS THAT THE CUSTOMER HAS NO IDEA WHAT HE ACTUALLY SPENT TO BUILD THE HOUSE.

The same statement is true for other major purchases as well. Certainly a buyer competent enough to build his own automobile or motorboat could also save significant dollars over the retail cost of these items. I know a pilot who actually built his own plane, and is ecstatic over its value. But those customers are few and far between. For most of us, we must pay for goods and services we cannot provide ourselves by paying a mark-up to someone who can. That’s not to say that you shouldn’t bargain aggressively for those goods and services, satisfying yourself that you are not overpaying in that process. But remember, the banks who lend for car purchases know that you are paying more for the car than the dealer did. They base their loan on the market value of the car, not what you are paying for it.

In fact, our friends in the car business can provide an outstanding lesson in the discussion of cost versus value, a lesson the car dealer often has to learn in a very expensive way. When a car dealer buys his vehicles from the manufacturer, he pays wholesale and sells retail. As long as he sells the car within the model year, he has no problem with this arrangement. Come the following mid-summer, however, this business model changes dramatically against the dealer. For no other reason except for the passage of a few months, the car no longer is perceived to have the same value. As the months pass by, the new cars from the previous model year are simply worth less and less. Finally, if the dealer wants to sell this aging inventory, he may have to discount the price below his wholesale cost. Talk about price versus value. For the car dealer his formula changes from month to month. The same lessons hold for the building of a new home as well. The price of the home from the builder is no more a barometer of the fair market value of the home, than the dealer’s cost for the car. If a customer would remember these truths when he thinks about his project, he can better direct his energy toward maximizing its value.

Our problem with the builder’s mark up may be due, in large part, to the fact that we have access to retail building component pricing that may come very close to the builder’s pricing. Generally, when we buy other big-ticket items, the cost paid by the retailer is well removed from our awareness. Because it is better hidden, we are less apt to be concerned by it. We think in terms of the value we are buying rather than the cost paid by the retailer. I’m not suggesting that this is a better way, only that it is the way. Clearly, we are less troubled by the retailer’s mark up when we don’t know his cost.

When we buy a piece of jewelry for $5,000 and decide to have it insured, an appraiser will examine the stone, and may very well report its value to be equal to, or greater than $5,000. In this case we are content. We bought the item, had it independently appraised, and are satisfied when the expert says it’s worth at least what we paid. Well, in most cases the jeweler paid less than half the $5,000.00 price at which he sold the stone to you. Why not? He is an expert capable of buying low and selling high, engaged in the activities of the jewelry business 365 days a year, a career for which he may have extensive formal training. From his sales, he must pay his overhead, stand by his product, and, spare the thought, earn a living. I don’t begrudge him his mark-up. Why then, are we so willing to begrudge the builder, who is doing no different than the jeweler?

Finally, no group of customers has a harder time understanding these concepts than those committed to the ideal of “sweat equity”. As I use the term here, “sweat equity” is the theoretical process by which a customer can do some of the physical work on his house, himself, thereby contributing to its value. There are companies that exist, or, until recently existed, that base their entire sales strategy upon inducing their customer to go forward on the basis of this magical “sweat equity”. I call it magical because its existence is purely a matter of “hocus pocus”. Like the Easter Bunny, there simply is no such thing. For some, the question of sweat equity centers around the ability of the customer to actually do the work. But for me, the customer’s ability is truly beside the point. In the best case, what the customer is hoping to achieve is a reduction in cost. Obviously, every hour of work he does himself is an hour of wages saved. I have absolutely no argument with that fact. But, as I have urged everyone to understand, equity is different from reduced cost. There is no reliable link between the two. In many cases the “sweat equity” customer actually loses equity, if for no other reason than the amount of labor saved in the course of weekend after a weekend of toil, is lost by adding a few more months to the interest due on the construction loan. There is no method by which you can use the sweat off your brow to guarantee equity in a new home project. Use the power of your mind, instead, to create a home that is capable of generating the highest possible appraisal.

As a final comment, I suggest that you review the appraisal to determine an accurate representation of the house and its environment is portrayed. Appraisers are human. Errors can be made. Check that the square footage is correct, the number of bedrooms and baths are reflective of the house plan and that no special features such as a fireplace, garden tub, etc. are missing.

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