A Manhattan new-development appraisal guide should answer two separate questions: what is the subject unit worth, and can the condominium project satisfy the lender’s project standards? Those questions overlap, but neither answer replaces the other. This guide maps the evidence a buyer, lender, attorney, or appraiser should test.
For buyer-facing context on the broader transaction, see Brett Ari Fischer’s Manhattan new-development buyer guide. It is useful for issue spotting, but Fannie Mae, the CFPB, New York City Department of Buildings, and the New York Attorney General control the authoritative rules discussed here.
Manhattan New-Development Appraisal Guide: What Value Means
An appraisal is an opinion of market value for a specific unit as of a specified date. It considers the unit, its location in the building, finishes, views, amenities, common charges, assessments, market conditions, and comparable evidence.
The appraisal does not certify that the sponsor’s construction is complete. It does not approve an offering plan. It does not establish that a lender can deliver the loan to Fannie Mae. Those are separate questions with separate evidence.
The buyer’s three valuation questions
First, does the contract price fit the market evidence? Second, are the comparable sales genuinely competitive with the subject? Third, do concessions, upgrades, financing terms, or sponsor-paid costs affect the price or the comparables’ reliability?
A high contract price can still be commercially reasonable if the appraisal explains the market evidence. A low appraisal can still be defensible even when the buyer believes the unit is special. The report must reconcile the evidence rather than repeat a target number.
Fannie Mae’s three closed comparable structure
The general rule
Fannie Mae’s comparable-sales guidance generally requires at least three closed comparable sales. Closed means settled or otherwise completed transactions, not merely listings or unaccepted expressions of interest. The appraiser should analyze closed sales, contracts, listings, market conditions, and the reliability of the data source. Comparable selection is a judgment supported by market evidence, not a mechanical exercise based only on distance or the building’s marketing category.
New and recently converted condominium projects
For a new or recently converted condominium project, the standard structure generally includes at least one settled sale from the subject project and at least one settled sale outside the project. The third settled comparable may be inside or outside the project. This is the precise meaning of the commonly repeated three-sale discussion. It does not mean that every new Manhattan condominium appraisal needs three settled sales within the building. It also does not mean that any three sponsor contracts automatically satisfy the requirement.
An in-project sale should be tested for arm’s-length characteristics, timing, unit differences, concessions, and the source of the transaction information. Early sponsor sales can be informative, but they may also contain incentives or unusual terms that require careful analysis.
The narrow pending-sale substitution
If no settled sale exists within the project because the subject is among the first units to sell, two pending sales within the project may substitute for one settled in-project sale. The appraisal must then include at least three settled sales outside the project. This is a limited first-sales alternative. It is not permission to use two pending in-project contracts in an ordinary appraisal while keeping only one outside settled sale. The factual condition, the subject’s place among the first units sold, and the lack of a settled in-project sale matter.
Pending sales also require verification. A signed contract may be renegotiated, canceled, delayed, or conditioned on financing. The appraiser should explain what is known about the contract, its terms, and its comparability as of the valuation date.
The small-project competing-project alternative
For a new or recently converted project containing two to twenty units, a competing-project approach may be available when the project has no settled or pending sales. The appraisal must explain why the competing projects are comparable and demonstrate market acceptance. That alternative is not a blanket exemption from comparable analysis. The report still needs credible market data and a reasoned reconciliation. A competing building should be compared for location, quality, age, amenities, unit configuration, restrictions, market segment, and transaction timing.
What happens when the data is thin
Thin evidence increases the importance of transparent verification. The appraiser should identify the data sources, explain limitations, and distinguish sales from listings, reservations, and pending contracts.
A buyer should not assume that a sponsor’s internal sales sheet is equivalent to independent settled-sale evidence. The lender may request additional verification, and the appraisal’s credibility can be affected when interested-party information is not corroborated.
Appraisal versus condominium project review
Two different underwriting gates
The unit appraisal asks whether the subject property supports a value conclusion. Project review asks whether the condominium project is eligible under the applicable lender and agency standards.
Fannie Mae expressly treats project review as additional to borrower underwriting, transaction underwriting, and the individual-unit appraisal. A satisfactory appraisal cannot cure an ineligible project. Project approval cannot guarantee that the subject unit will appraise at its contract price.
What project review examines
Project review can examine legal documents, construction completion, insurance, budgets, reserves, assessments, litigation, ownership structure, presales, occupancy, sponsor control, and other project-level risks. For new projects and new phases, the applicable review may require substantial completion, a certificate of occupancy or substantially similar government document, completed units and buildings in the relevant phase, immediate occupancy, completion assurance, and a specified level of purchaser presales.
The cited Fannie Mae new-project requirements generally include at least 50 percent of units conveyed or under contract to principal-residence or second-home purchasers. The exact test depends on the project, phase, review method, transaction, and applicable policy date.
Review methods and project-specific treatment
Fannie Mae project standards identify review methods such as Full Review, a project-review waiver for specified situations, and PERS for projects requiring a more comprehensive submission. A waiver does not eliminate appraisal or property-eligibility requirements.
PERS can address project-specific facts, including special considerations that require documented review. It is not an informal sponsor exception. The lender must obtain the required materials, and final project approval may be necessary before loan delivery.
FHA condominium approval is not a universal substitute for conventional project eligibility. A buyer should ask which agency, review method, and lender overlays apply to the actual loan rather than rely on a generalized statement that the building is approved.
The 2026 policy-date caution
Fannie Mae retired Limited Review for loans with application dates on or after August 3, 2026. Earlier application dates can have pipeline treatment. Its March lender letter and August Selling Guide announcement establish the effective dates; ask the lender which review route applies to this loan.
Sponsor concessions, upgrades, and financing assistance
Disclose the complete economic deal
The appraiser should receive the complete ratified contract and addenda. Disclose seller or sponsor credits, rate buydowns, paid common charges, transfer-tax payments, upgrades, non-realty items, below-market financing, and other terms that could affect value.
An incentive is not harmless merely because it appears in a side letter or marketing schedule. The lender and appraiser need enough information to understand the transaction’s true economics and compare it with other sales.
Interested-party contribution caps
Fannie Mae treats contributions from sellers, builders, developers, brokers, affiliates, and other interested parties as IPCs when they assist the transaction. IPCs generally cannot fund the down payment, reserves, or the borrower’s minimum contribution.
For a principal residence or second home, the cited caps are generally 3 percent above 90 percent LTV, 6 percent at 75.01 to 90 percent LTV, and 9 percent at 75 percent LTV or less. Investment property is generally capped at 2 percent. These percentages use the lower of the sales price or appraised value, not the loan amount. Actual closing costs and prepaid items still limit what can be used. Excess financing concessions can become sales concessions and reduce the price or value used for LTV.
Appraisal adjustments are not dollar-for-dollar
A concession, upgrade, or paid expense is not automatically deducted dollar-for-dollar from a comparable or from the subject’s value. Fannie Mae requires adjustments to reflect the market’s reaction.
A $50,000 upgrade could produce a smaller, larger, or negligible value difference depending on buyer preferences, competing inventory, scarcity, and whether comparable buyers paid more for similar features. The appraiser must support the conclusion.
CO, TCO, and closing risk in New York City
Legal occupancy and final documentation
New buildings generally require a certificate of occupancy. The Department of Buildings states that legal occupancy requires a certificate of occupancy or temporary certificate of occupancy, depending on the circumstances.
A final CO is different from a TCO. A final CO follows completion of required inspections and resolution of applicable open items. It is not simply a marketing milestone or a substitute for lender underwriting.
Why a TCO needs specific review
A TCO permits temporary occupancy while remaining issues are addressed. TCOs typically expire after 90 days, although renewal may be available when issues remain unresolved.
The Department of Buildings recommends negotiating closing around a final CO rather than a TCO. A buyer may inherit responsibility for obtaining the final document, and an expired or unrenewed TCO can complicate insurance, resale, or refinancing.
The buyer’s attorney should verify the building and unit records, TCO expiration and renewal status, open applications, violations, lender conditions, title requirements, and the contract’s allocation of completion risk. A TCO is not automatically unacceptable, but it is not automatically equivalent to a final CO.
Offering plans and sponsor representations
The plan is the controlling disclosure
New York Attorney General guidance directs buyers to read the entire offering plan and consult counsel. The plan and amendments should be checked for sponsor obligations, unit specifications, amenities, closing conditions, projected expenses, construction qualifications, and risk disclosures.
Renderings, sales-center statements, and broker descriptions may help explain the marketing, but they should not replace the plan’s written terms. The plan is not an appraisal, and acceptance or effectiveness does not guarantee construction quality, value, or loan eligibility.
Official Manhattan plan example
The Attorney General’s Real Estate Finance Database includes an official record for 130 William Street Condominium in Manhattan. That record is useful for locating the plan, amendments, sponsor information, and filing history.
The record is not evidence that any unit is worth a particular amount. It does not replace reading the plan, checking current amendments, confirming building status, or obtaining lender and appraisal review. It is an example of the official document trail a buyer should use.
New York offering-plan regulations also require prominent cautions that filing does not mean governmental approval and that prices are not approved by the Attorney General. Those statements should be preserved in any buyer-facing explanation.
Low appraisal arithmetic: a $2 million example
Assume a buyer signs a $2,000,000 contract and the appraisal is $1,850,000. The buyer wants an 80 percent loan.
For the purchase LTV calculation, use the lower value. An 80 percent loan based on $1,850,000 is $1,480,000. The difference between the contract price and that loan is $520,000 before closing costs. That gap is not automatically a lender error, a seller obligation, or a right to cancel.
If the buyer instead sought a $1,600,000 loan, the loan would be approximately 86.49 percent of the $1,850,000 appraisal. That may change underwriting, mortgage insurance, pricing, reserve, or approval requirements.
At a 6 percent IPC cap, using the $1,850,000 lower value, the nominal cap is $111,000. The usable amount remains subject to actual eligible costs, disclosure, the minimum-contribution rules, and the applicable loan program.
Responses to an appraisal gap
The buyer can review the report for factual errors, omitted features, poor comparable selection, unsupported adjustments, or prohibited bias. A lender’s reconsideration-of-value process may address those issues when supported by credible information.
Other responses may include renegotiating the purchase price, increasing cash, changing the loan structure, challenging contract conditions, or using a contractual appraisal contingency. Availability depends on the contract, lender, timing, and applicable law.
A second opinion may provide useful market information, but it does not force the original lender to adopt a higher value. The strongest challenge is specific, documented, and tied to the valuation date.
Buyer Strategy
Before signing, ask the lender how it will review the project, which appraisal rules apply, and what documents the sponsor must provide. Ask the appraiser or lender how in-project sales, outside sales, pending contracts, concessions, upgrades, and common charges will be verified.
Build a written incentive schedule. Include every credit, paid expense, upgrade, rate buydown, transfer-tax payment, common-charge period, and non-realty item. Give it to counsel and the lender rather than relying on a sales representative’s summary.
Request the current offering plan and every amendment. Check the official Attorney General record, the building’s CO or TCO status, open DOB items, insurance, assessments, and the contract’s closing provisions. Do not treat a sponsor’s projected completion date as the same thing as a final CO.
If the appraisal is low, act quickly. Compare the report with the contract, plans, specifications, and verified market data. Ask for a documented reconsideration before the financing and contract deadlines expire. For a new-development appraisal review, contact TheNewYorkCityBroker.com/contact-me.
Frequently Asked Questions
No. Fannie Mae’s general structure is at least three closed comparable sales. For a new or recently converted condominium, the appraisal generally needs at least one settled sale inside the project and at least one settled sale outside it. The third settled sale can be inside or outside. The phrase “three settled sales” should not be rewritten as “three inside-building sales.” Each sale still needs appropriate verification, adjustment, and explanation. Sponsor-originated transactions may be useful, but unusual incentives, timing, or financing terms can affect how much weight the appraiser gives them.
For a two to twenty unit project with no settled or pending sales, competing projects may be considered when the appraisal explains comparability and market acceptance. That alternative still requires credible evidence.
Only in a narrow situation. When no settled sale exists inside the project because the subject is among the first units to sell, two pending in-project sales may substitute for one settled in-project sale. The appraisal then needs at least three settled sales outside the project.
Pending contracts must be explained and verified. They are not equivalent to completed sales in every circumstance. A contract can be renegotiated, canceled, delayed, or conditioned on financing. The appraisal should identify what was known about the pending transactions as of the valuation date.
The substitute is tied to the subject’s place among the first units to sell. It is not a general option for avoiding weak settled-sale evidence.
No. Project review and valuation answer different questions. Project review addresses eligibility, legal documents, construction, insurance, presales, occupancy, finances, and other project risks. The appraisal addresses the subject unit’s market value.
A project can satisfy a review method while a unit appraises below its contract price. Conversely, a unit can have strong comparable evidence while the project remains ineligible. Ask the lender which review method applies and whether final approval is required for delivery. Also ask whether the project has a final approval, a conditional status, or a waiver. Those labels can have different delivery consequences.
The complete economic deal should be disclosed. Fannie Mae rules address seller, builder, developer, broker, affiliate, and other interested-party contributions, including certain credits, financing assistance, paid expenses, and non-realty items.
Undisclosed terms can undermine the appraisal, violate underwriting requirements, or affect project eligibility. A buyer should provide the contract and every addendum to counsel and the lender. The appraiser also needs enough information to assess whether a comparable’s concession affected the market reaction.
An IPC cap is not a cash rebate entitlement. Eligible costs, minimum borrower contribution rules, loan type, LTV, and disclosure requirements still apply.
Not automatically. A TCO can permit temporary legal occupancy, but it is different from a final CO and generally has an expiration period. The Department of Buildings recommends negotiating closing around a final CO.
The lender, title company, insurer, and contract may impose additional requirements. Verify the actual document, scope, expiration, renewal status, open items, and responsibility for completion. A TCO is not automatically unacceptable, but it is not automatically equivalent to a final CO.
The buyer should also confirm whether an expired TCO could affect future refinancing, insurance, or resale. Put completion responsibility and any escrow protection in writing.
First, check the report for factual mistakes, omitted features, weak comparables, unsupported adjustments, and concession errors. Ask the lender about a documented reconsideration of value and provide specific evidence. Do not wait until the closing date if the contract sets earlier financing deadlines.
At the same time, review the appraisal contingency, financing contingency, renegotiation options, and available cash. The buyer may need a lower price, more cash, a different structure, or a contract remedy. Keep a written record of every request and response.
For this Manhattan new-development purchase or another NYC buying plan, contact TheNewYorkCityBroker.com/contact-me.
