Amish Appraisal

[Brian W Street]

So I have tried searching the forum for help and don't see much in the way of completing an appraisal on an Amish home. I have a nice, newer 3,000+ sqft home on 16 acres with large barn. With the exception of no electrical service or interior circuits and no central heating/cooling systems, it would look and function as any other home. Now if I had competing type Amish sales we would not have any issues but the only sale that I have found in this area is 2 years old. It is a decent sale and will be what I am basing my value estimate on but what are some things that I should look out for or things that I can not discuss in the report? Is it wrong to state that the Amish faith is the reason for the lack of amenities? Since I do not have competing type sales what range of adjustments should be made? This is a small community of Amish and in the 20+ years of appraisal assignments I have completed 1 other report but that was years ago, back in the days when I could speak with the loan officer and the loan was in-house. I am just concerned with what I can or can not say in the report. Any help or suggestions would be appreciated.

 

[ramrcdk]

Don't describe "people"
I would not mention word: "faith"
Is it an amish " community " ?
Interesting assignment! Is this a private lender /bank? Lend w/o utilities, heat, etc???
Describe the market ... Limited numbers of sales, where property owners reside for numbers of years ...
and logically further limiting area sales of subject grid bracketing comparisons...

Find that Report, what did you do back then?

 

[Brian W Street]

Describing why it has no electrical or heating systems is the issue, can I even mention that it is an Amish home? I spoke with the Client but they have not gotten back with me to let me know if it is being kept in-house or if it is going to the secondary market. I wish that I could find that report, more than 20 years ago since I did the assignment. A different community of Amish too, if I remember correctly that gentleman was more than happy to talk to me about his faith and the ways of the Amish, it was also a time when that loan stayed in the community at the local bank. This gentleman, on the other hand, did not even want me in his home. thanks for the tips.

 

[Riick]

In a FNMA world, you're not supposed to talk about people
(? Potential buyers, are not people?)
Still, I'm guessing your most probable buyer might be Old-Order (?) Amish.

If not, then the property has a few tons of functional depreciation for the average buyer.
Why it has no electrical system, or central heat is not a question you need to answer.
Describe the property accurately, and go on with the report.

I *think* the lender would want you to consider the property's market value to the average buyer.

CONTACT THE LENDER; THEY NEED TO KNOW WHAT THE APPRAISAL PROBLEM IS, AND GIVE YOU A GO-AHEAD, OR A THANKS, WHAT'S YOUR FEE FOR THE INSPECTION.

**Get that answer in writing.** (("I need it for my file on the appraisal"))
At least, that's the way I'd handle your situation.

 

[J Grant]

So I have tried searching the forum for help and don't see much in the way of completing an appraisal on an Amish home. I have a nice, newer 3,000+ sqft home on 16 acres with large barn. With the exception of no electrical service or interior circuits and no central heating/cooling systems, it would look and function as any other home. Now if I had competing type Amish sales we would not have any issues but the only sale that I have found in this area is 2 years old. It is a decent sale and will be what I am basing my value estimate on but what are some things that I should look out for or things that I can not discuss in the report? Is it wrong to state that the Amish faith is the reason for the lack of amenities? Since I do not have competing type sales what range of adjustments should be made? This is a small community of Amish and in the 20+ years of appraisal assignments I have completed 1 other report but that was years ago, back in the days when I could speak with the loan officer and the loan was in-house. I am just concerned with what I can or can not say in the report. Any help or suggestions would be appreciated.

You need to speak to your client, because some lenders or loan programs such as fannie or FHA may not lend on a house that lacks electrical service/ heating and cooling ( even if market accepted ) Need to ask lender client, will they accept a report "as is" on a house without heat source or electrical service or does it need to be made subject to. (or they may put it on hold this is an odd case)

As far as the people...you can just say homes without heat or electrical are typical and market accepted in the small sub market subject rural community . - that assumes you have similar comps lacking heat and electric though you can always adjust for that .

 

[Pittsburgh Pete]

Just curious, how were you able to contact the borrower?

 

[Brian W Street]

The Lender is well aware of the task at hand and that these Amish homes seldom if ever become available to the market. I also told them that I did find an Amish sale but that it was from 2017 but it is a very good comparable in terms of site and home but with inferior barn. You are correct in assuming that if the home ever did become available it would stay in the community but not ever likely to leave the family from what I have found. I would think that your logic is sound about the Client needing the value to be to the average buyer. So I should just state the fact that the home has no electrical service or central heat without discussing the reason and try to support an adjustment for lack of the items.

 

[Brian W Street]

Cell phone! Its the strangest thing, I wanted to ask him so many questions about their lifestyle but as I said I don't think he even wanted me there. As I was driving there every barn had high-end solar arrays, why is it okay to use DC and not AC?

 

[Overimprovement]

1) Treat it like it is a geodesic dome or similar complex property--very few potential buyers but also very limited supply.
2) What percentage of homes in that area are similar? OR what percentage of the population is Amish? I know several counties in NE IN with a decent sized Amish population.
3) Can you estimate a cost to retrofit the home with market-typical mechanicals? This cost, plus some entrepreneurial incentive, could make it more similar to homes with typical utilities.

No need to mention their name, religion or anything, just mention there is a small market segment in this area that prefers homes without X, Y, and Z. Can you talk to any local lenders and see how they have handled this in the past?

The big decision is do you approach this as is--a unique property, or as one that needs to be 'fixed' to become attractive to the market at large?

 

[Brian W Street]

you can just say homes without heat or electrical are typical and market accepted in the small sub market subject rural community . - that assumes you have similar comps lacking heat and electric though you can always adjust for that .

Great idea, that will be the first line of my Final Comments addenda, it is typical within the sub-market yet atypical within the general market or to the average buyer. But as noted, there is only 1 dated comparable, the 3 main comparables will have to be typical homes with an estimated adjustment applied.