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Does selling X-mas trees make it commercial?

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Mark Correnti

Thread Starter
Freshman Member
Joined
May 18, 2002
Professional Status
Certified Residential Appraiser
State
New Hampshire
Did a nice cape on 16 acres. The lot size in NH is typical so that's no problem. Back of lot had 2,000 Christmas trees growing of which the owner sells 300 a year retail at $25 and 100 a year wholesale at $17.50. Zoning allows for the activity. Private sale. Buyer likes the house and could care less about the trees. I don't feel that I can just value the house and ignore the income stream as a certified residential appraiser. So I sent it back and say get a CG appraiser to make the call.
Here's the thing that stumped me. The chief underwriter called back and left a message on the machine and asked if the trees are sold only one month a year, how does that make the property's highest and best use non-residential. He may have a point there.
Question: As a certified residential appraiser can I value the residence with a brief explainantion of the tree sales and call the HBU residential? Or can only a certified general appraiser make that call?

-Merry Christmas in New Hampshire
 

Paul Ness MAI

Member
Joined
Jan 14, 2002
Professional Status
Certified General Appraiser
State
Pennsylvania
You need to ask your client if they want the value of the real estate only (with or without the value of the standing tree stock) or the going-concern value of the tree business. A property's real estate or entire going-concern (if there is a business) can be appraised, but if there is a business on the property, you don't necessarily have to appraise it as the going-concern.

If they want the value of the going-concern, then you should pass on the assignment. If they want the real estate only, I think you're ok. If you were instructed to include a value for the tree stock, then you need to get a tree expert to come in and take inventory and estimate a separate value for the trees. If you are just uncomfortable about the whole thing - take a pass on it.
 

airphoto

Senior Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Pennsylvania
Mark,

Believe you to be straining over a gnat .. underwriter's given you the 'out.' Back to the scope of the appraisal. Value the residential use, as you've done .. disclose the incidental use, with no contribution (it's as optional as selling your used car from the front lawn.) Make no judgement as to the value of the standing trees (could be any forest, and unused .. makes for not having to mow the fields) and let it go ..
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The value of the business can be attributed to "Good Will". It's no difference between farm land selling for residential use. Yes, the land can have cows run on it, but the value is in the land. If you run the ROI, you will probably see that the business return does not return an acceptable return on the land and improvements. Just mention the use in the site analysis and comment that the property is not being valued as an operating business.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
:lol:
They are just trees, don't sweat the pending forest...

After a year or two of neglect the trees quickly refert to ''unsaleable" as seasonal decoration, but remain kind of cool to have in the back yard... if that's what you like: We have plenty of these small forests in our neck of the woods. :roll:

I would mention the presence of young trees planted in rows, state that they were not given a value as an operating business based on conversation with the new owner (and lender), and move on with no nightmares about forests or trees.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Lee Ann:

I didn't know they had Christmas trees in the midwest. I thought it was only corn, soy beans and sun flowers.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
:lol: :lol:
They start the piney greens in the shadow of the flowers so they get a toe hold!

Folks out here like fresh pine as much as people in other areas of the country. Just takes extra water!

8O We DO however have the nematode infestation that is taking out nearly all coniferious and evergreen tall plants.

:cry: It is a sad thing :cry:

Particularly since I was intending to 'grow my own' and sell a few also!
Thats TREES folks! not anything illegal :wink:
 

Jim McGrath

Junior Member
Joined
Jan 25, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Did a nice cape on 16 acres. The lot size in NH is typical so that's no problem. Back of lot had 2,000 Christmas trees growing of which the owner sells 300 a year retail at $25 and 100 a year wholesale at $17.50. Zoning allows for the activity. Private sale. Buyer likes the house and could care less about the trees. I don't feel that I can just value the house and ignore the income stream as a certified residential appraiser. So I sent it back and say get a CG appraiser to make the call.
Here's the thing that stumped me. The chief underwriter called back and left a message on the machine and asked if the trees are sold only one month a year, how does that make the property's highest and best use non-residential. He may have a point there.
Question: As a certified residential appraiser can I value the residence with a brief explainantion of the tree sales and call the HBU residential? Or can only a certified general appraiser make that call?

-Merry Christmas in New Hampshire
 

xmrdfghap

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Florida

I didn't know they had Christmas trees in the midwest.

Unlike the desert southwest where you decorate tumble weeds....... :lol:
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Greg! :lol: :lol: :lol:

Spray paint them white and stack up several and you have a snowman. Probably the only one that will stay in your SW yard for longer than 2 hours. :roll:

Actually, most of us natives aren't excited about tumbleweeds, nor decorating them. The eastern transplants, now they are another story :roll:. They usually seem to be taken with the silly plants for a few years until the uniqueness wears off. Pesky little things. When the tumbleweeds are green they make ya itch and sneeze. When they are dry, they are a fire hazard.


Mark,

Agree with the others. Too small and insignificant an operation to consider a true commercial use. Sounds as though the seller had more of a hobby than anything. This is underscored by the buyer's apparent non-concern with the tree operation. Now if you had a larger than average parcel with much of the acreage dedicated to the tree farm along with other non residential buildings for that purpose, it would be a different story.
 
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