In 2000, Joseph and Kimberli Davis bought a parcel of land in Tennessee for $135,000 and hired an architect to draw plans for the home they wanted to build on the plot, and a contractor to bid on the plans. The contractor estimated it would cost $600,000 to build the home.
The Davises applied for a home loan from SunTrust Bank to fund the construction of the property. SunTrust hired an appraiser to place a future value on the home post-construction, and provided the appraiser with a copy of the plans and specifications for the home, along with an appraisal order form stating the "sales price" of the home at $735,000.
The appraiser estimated the home’s future value at $735,000 and SunTrust funded a loan in the amount of $580,000 to the Davises, who funded the remaining costs of the construction with a separate home equity loan.