Questions about outbuilding value

[brokenokie]

Hi all, and thank you in advance for your time. I am currently contracted to sell our farm, and unfortunately the appraisal came in lower than the contract price. After reviewing the appraisal report, it appears to me that the appraiser found great comparables, as I expect this can be difficult in rural areas.

Where I'm confused and feel like I should respond in some way, is that the appraiser only gave a 20k adjustment for the outbuildings on the property. Said outbuildings include a 100'x30' 9 stall horse barn with 2 garage bays, an office, hot water, and electricity and a 30'x40' metal quonset hut in like new condition. There are a few other sheds on the property as well, but they are small enough to likely be ignored.

I recognize that I'm not at all an expert, so I'm here to gain further understanding, and maybe learn how to to respond in my ROV without coming off offensively or like a know it all civilian. The appraisers notes say that the outbuildings were not given much value because of their poor condition, but as I stated, the quonset hut is like new and the horse barn is cinder block construction and in perfectly useable condition. These are significant selling points for the property.

Please forgive me if I'm asking a dumb question!

 

[TerryRohrer]

Do the sales included in the report have any outbuildings of similar size and age?

How large an acreage are you dealing with?

 

[brokenokie]

One of the comps does have a single wooden barn of similar size to my horse barn, but it's completely unfinished and open inside and age is definitely not equivalent. It's an old dairy barn. The appraiser gave no adjustment for outbuildings in this comparison. This sale is also a year old.

Acreage is 7.5 acres.

 

[TerryRohrer]

One of the comps does have a single wooden barn of similar size to my horse barn, but it's completely unfinished and open inside and age is definitely not equivalent. It's an old dairy barn. The appraiser gave no adjustment for outbuildings in this comparison. This sale is also a year old.

Acreage is 7.5 acres.

Sounds to me like it was just easier to say they had no value, than to actually do any of the work they were paid to do. That is more a residential acreage tract than a farm. Not knowing anything about Virginia, is it out in the toolies, or are there plentiful small homes on small acreage tracts in the vicinity? Does yours have a home on it?

 

[J Grant]

Hi all, and thank you in advance for your time. I am currently contracted to sell our farm, and unfortunately the appraisal came in lower than the contract price. After reviewing the appraisal report, it appears to me that the appraiser found great comparables, as I expect this can be difficult in rural areas.

Where I'm confused and feel like I should respond in some way, is that the appraiser only gave a 20k adjustment for the outbuildings on the property. Said outbuildings include a 100'x30' 9 stall horse barn with 2 garage bays, an office, hot water, and electricity and a 30'x40' metal quonset hut in like new condition. There are a few other sheds on the property as well, but they are small enough to likely be ignored.

I recognize that I'm not at all an expert, so I'm here to gain further understanding, and maybe learn how to to respond in my ROV without coming off offensively or like a know it all civilian. The appraisers notes say that the outbuildings were not given much value because of their poor condition, but as I stated, the quonset hut is like new and the horse barn is cinder block construction and in perfectly useable condition. These are significant selling points for the property.

Please forgive me if I'm asking a dumb question!

Did you use a RE broker, or did you sell on your own (normally, a RE agent submits the ROV if a broker is used )? If you submit an ROV, explain your position regarding outbuildings as you did here and hope for the best.

Nobody can tell you over the internet if the buildings should have had more contributory value in the appraisal. A prefab Quonset hut, depending on the foundation, might not have much value. A CBS barn normally would have more value, especially since it has garage bays. However, if HBU ( highest and best use ) for the property is no longer equestrian use, a large empty barn can be an eyesore that a future buyer might want to demolish.

7.5 acres sounds more like a hobby farm than a working farm - if the MVO of the appraisal is below the SC and an ROV does not change it, the options are for you to lower the price, or the buyer can come up, or you can meet in the middle, or the deal is off and start over.

 

[brokenokie]

Sounds to me like it was just easier to say they had no value, than to actually do any of the work they were paid to do. That is more a residential acreage tract than a farm. Not knowing anything about Virginia, is it out in the toolies, or are there plentiful small homes on small acreage tracts in the vicinity? Does yours have a home on it?

This is what I feel happened... It's zoned ag and yes it has a home. I have no issues with the appraisal of the house, but how do I make a case for the outbuildings? This is a pretty common acreage, but more improved than most.

 

[brokenokie]

Did you use a RE broker, or did you sell on your own (normally, a RE agent submits the ROV if a broker is used )? If you submit an ROV, explain your position regarding outbuildings as you did here and hope for the best.

Nobody can tell you over the internet if the buildings should have had more contributory value in the appraisal. A prefab Quonset hut, depending on the foundation, might not have much value. A CBS barn normally would have more value, especially since it has garage bays. However, if HBU ( highest and best use ) for the property is no longer equestrian use, a large empty barn can be an eyesore that a future buyer might want to demolish.

7.5 acres sounds more like a hobby farm than a working farm - if the MVO of the appraisal is below the SC and an ROV does not change it, the options are for you to lower the price, or the buyer can come up, or you can meet in the middle, or the deal is off and start over.

We are selling fsbo, the buyer has an agent, and their loan officer will be submitting the rov

Does it matter that the buyer is a large animal veterinarian that intends to use this property as her practice as it is connected to her home property? This is horse country, and the property has fenced and maintained pasture as well.

 

[brokenokie]

Also, is it inappropriate for me to contact the appraiser for an explanation as to why he valued them the way he did before submitting the rov?

 

[J Grant]

Does it matter that the buyer is a large animal veterinarian that intends to use this property as her practice as it is connected to her home property? This is horse country, and the property has fenced and maintained pasture as well.

An appraisal is done with the typical buyer in mind . Having a nice big barn might matter a lot to THIS particular veterinarian buyer - in which case he/she can pony up ( forgive the pun) the extra funds to meet the SC price.

If your appraisal is 950k (for example) and the purchase price was 980k, nothing prevents the buyer from putting up 30k more to meet the price. That is an acid test of value - or the financial strength of your buyer. Or how much you want to sell as a seller. I used to sell RE and wearing a broker hat is different than an appraiser hat.

If it is horse country with many small farms still being used for equestrian, it sounds like the barn perhaps should have had more value. But without seeing the appraisal, the house contribution etc I can not say.

 

[J Grant]

Also, is it inappropriate for me to contact the appraiser for an explanation as to why he valued them the way he did before submitting the rov?

Yes, it would be inappropriate.

You would be better off trying to find a sale with a barn to submit to the lender as a comp in the ROV. Go on zillow and look for a sale like that in the area if you did not use a RE agent (who has access to MLS)