Commercial Vs Farm Vs Residential

[2bmds]

Recently had an appraisal done, the appraiser concluded that our property should all be commercial. Looking for opinions on this...

We own 13.5 acres of farmstead. One house, one barn, one shop, one Quonset, several acres of tree'd shelterbelt, grain bins. On this land, we use .75 acres for production plus one greenhouse 26'X48' for production plus we have one old single car garage - that shares a wall with the house but does NOT have an entrance to the house, as packaging and holding area and production space for our culinary herbs we well to grocery stores. The rest of the land is just used for us - we sell nothing from it. The house is the house we live in, single family. All other buildings are used for storage of our personal belongings and not connected with the business.

Should the whole property have been classified as commercial, farm, residential or should it have pro-rated/broken up so part was commercial or farm and part was residential?

Are there some industry standards for appraisers that we could reference on this topic - if so, please refer me to them.
Thanks =
we are in ND.

 

[Terrel L. Shields]

These are mixed use properties. I don't quite understand the nature of your business. You are saying that about 10 acres is used for grazing or just a really big yard. You have a house - thus that part is residential. You have some sort of greenhouse operation. That is an ag business - or might be called a building intensive agricultural property.

Personally I would call it Agri - building intensive with surplus land and a residence. It is Mixed Use.

If the appraiser called it "all commercial" then are you being encroached by development of other commercial properties? So much so that the land is worth more as if vacant than it is with its current configuration? I bet not. If not, the appraiser is wrong. Send the report to the state appraisal board - no mention of value. Simply say you don't think it is "commercial".

You might be hard pressed to find any document or resource that describes such properties.

 

[JTip]

Mixed use.

This means you won't qualify for gov't backed residential loan products (assuming you are doing a refi) and would enjoy a higher rate for a commercial loan.

You said 'production' twice in your post......

 

[leasedfee]

Some random questions:

1. How many households are in a 1 mile and 3 mile radius of your property?
2. How many vehicles per day drive past your property?
3. Is it on a corner of two busy intersections? Off of a highway interchange?
4. How far are you from the nearest city and how many people in that city?
5. What is the zoning -- if any?
6. What is the largest public water/sewer line past the property, or how far away are they?
7. What are the surrounding uses to the north, south, east, west?
8. How far away are other commercial properties; their uses; size; era of construction?
9. Willing to post an aerial photograph of your property and the one-mile surrounds? You can turn-off the street names.

 

[Sid Holderly]

BY USDA a farm has a minimum of $1,000 of production per year. (A balcony in the city could be a farm).
Your local zoning rules and regs may define farm or commercial in your area.
Generally homes with acreage are generally questioned by mortgage companies (does it have farm income) and many do not lend if it does.
In my county you would be called a home business that could operate under residential zoning or a farm as agricultural zoning. It does not appear you have commercial buildings unless you are in an area zoned commercial or industrial. Multiple zoning classifications on a single parcel are know to exist in this area.

In my neighborhood you would be a farm if outside of city or town limits. Inside town limits wold be more complex

This does not help much since it depends a lot of you local rules and regs as well as what your neighbors are.

 

[2bmds]

These are mixed use properties. I don't quite understand the nature of your business. You are saying that about 10 acres is used for grazing or just a really big yard. You have a house - thus that part is residential. You have some sort of greenhouse operation. That is an ag business - or might be called a building intensive agricultural property.

Personally I would call it Agri - building intensive with surplus land and a residence. It is Mixed Use.

If the appraiser called it "all commercial" then are you being encroached by development of other commercial properties? So much so that the land is worth more as if vacant than it is with its current configuration? I bet not. If not, the appraiser is wrong. Send the report to the state appraisal board - no mention of value. Simply say you don't think it is "commercial".

You might be hard pressed to find any document or resource that describes such properties.

We are very rural - no neighbors even within 1.5 miles - just cropland surrounds us. 10 miles to the nearest town of 300 people. There is no grazing land within the 13.5 acres, just really big yard. Only one 26X48 greenhouse, the 3/4 of an acre and the converted single car garage - that shares a wall with the house and has no entrance into the house are used by us to grow culinary herbs which we sell to grocery stores and restaurants and are the only pieces we use for our business. All of the rest of the 13.5 acres is shelterbelt (lots of trees), the barn, shop and Quonset which we use for our own storage and garage and a lot of yard and the house. Does that change your opinion? Would you still call it mixed use? Would it be mixed use Agricultural/residential or what and how would you appraise the 'house' or residential portions for someone wanting a home refinance?

 

[2bmds]

BY USDA a farm has a minimum of $1,000 of production per year. (A balcony in the city could be a farm).
Your local zoning rules and regs may define farm or commercial in your area.
Generally homes with acreage are generally questioned by mortgage companies (does it have farm income) and many do not lend if it does.
In my county you would be called a home business that could operate under residential zoning or a farm as agricultural zoning. It does not appear you have commercial buildings unless you are in an area zoned commercial or industrial. Multiple zoning classifications on a single parcel are know to exist in this area.

In my neighborhood you would be a farm if outside of city or town limits. Inside town limits wold be more complex

This does not help much since it depends a lot of you local rules and regs as well as what your neighbors are.

We are in the country - 10 miles from any town and 1.5 miles from any neighbor, zoned as a homestead (agricultural/residential) and we do have more than $1,000 in income from the sale of our crop (culinary herbs sold to restaurants and grocery stores).

 

[Sid Holderly]

Sounds like rural residential with an agricultural zoning( if you have zoning). Not a good pick for large regional or national banks and mortgage companies for refinancing.
Local bank or FSA (FCS) Farm Service Agency handle these loans best.

 

[2bmds]

Some random questions:

1. How many households are in a 1 mile and 3 mile radius of your property?
2. How many vehicles per day drive past your property?
3. Is it on a corner of two busy intersections? Off of a highway interchange?
4. How far are you from the nearest city and how many people in that city?
5. What is the zoning -- if any?
6. What is the largest public water/sewer line past the property, or how far away are they?
7. What are the surrounding uses to the north, south, east, west?
8. How far away are other commercial properties; their uses; size; era of construction?
9. Willing to post an aerial photograph of your property and the one-mile surrounds? You can turn-off the street names.

Answers to above:
1. 1 within one mile and 3 within three miles
2. when it is harvest time - 3 or 4, other times of the year none
3. no and no
4. 10 miles to one city with fewer than 100 people, 10 miles to another city with 300 people, 25 miles to a city of any size - less than 3,000 people
5. it is a homestead (residential surrounded by agricultural) no real zoning
6. the only public water would be in the cities mentioned above
7. all surrounding areas are crop land
8. nearest commercial properties would be in the cities mentioned above and would be VERY small, bars, small banks, café, grain elevators, no new construction within the last 15 years.
9. see included photos

 

[2bmds]

Sounds like rural residential with an agricultural zoning( if you have zoning). Not a good pick for large regional or national banks and mortgage companies for refinancing.
Local bank or FSA (FCS) Farm Service Agency handle these loans best.

Thank you for your opinion - we are working through a local bank (one we have dealt with for many years who handles all of our loans/accounts/etc. They just won't do a residential refinance if the appraisal calls the property commercial.