Earth Sheltered Home: Appraisal And Comparable Problems

[Mark K]

I don't agree with some others that this would be a particularly complex appraisal, however, finding a lender willing to loan on it would be a challenge.

If your local assessment office is using standard construction they are either too lazy or too incompetent to perform a proper valuation. And, if like many other assessor offices, they would be unaccustomed to and unwilling to accept the results of a non-standard appraisal report.

I'm not sure anyone here can assist without knowing more about your particular assessor and their level of competence with unique properties. In my area they would just use the cost approach (maybe not a bad idea for your situation) and call it a day. Keep in mind that assessors in this state primarily use cost manuals for most real property and then contort, pervert, and adjust it in their attempt to reach a market value.

Your property is unique but your situation is not. In this area appraisers occasionally encounter 'geodesic dome' homes, timber frame homes, pole barn homes, and earth sheltered (generally with exposed roof, not covered w/2-3' of soil). Appraisals are challenging and financing comes exclusively from local lenders that will loan about 75% or less. These problems come with the territory when a unique home is built or purchased. And this is part of the reason that they suffer from various forms of obsolescence, particularly economic, and they sell for a price that often seems to be under market value.

Good luck.

 

[Marant]

I believe in TX anyone can testify at the ARB, but if I am going to do this I want to do it right and have the most qualified evidence to present.

I have been aware of the problem since we built the home in 2009, just have not done anything about it yet. Over the years I have attempted to put a group of similar homeowners together, nationwide, but have had no success. I am hopeful that if I can obtain good, qualified opinions they can be helpful to others in our situation. It would be nice to establish a group of similar homeowners to address common concerns. Possibly a small group of interested appraisers will be created for future appraisals, even if they are scattered nationally. I guess we have to start somewhere to build awareness and information for everyone to use. I will certainly offer our house and experience to anyone who wants to see it and use us to begin the process of establishing a viable database.

Our type of construction presents a multitude of variances from the norm, which is compounded by a lack of absolute numbers of examples. I have gone round and round with our insurer, since a concrete earth sheltered home is much less likely to suffer damage from weather, fire, rot, termites, etc. They will agree with me in discussion, but, since there are insufficient numbers of examples to constitute an actuarial pool, they cannot get the statistics they need to establish realistic premiums. Different side of the same coin.

In case anyone is interested I am attaching a few pictures of our home (hopefully they will come through, though it is not easy to attach photos). If there are any specific questions or requests for photos I will be happy to address them. If anyone wants to see the actual course of construction I created a blog from start to finish at marant1946.blogspot.com

https://photos.google.com/photo/AF1QipMX_i4z9ZNUPOMdwP3w8CIDy_D0ww-rwEcpMaDT

https://photos.google.com/photo/AF1QipPpKBYsrvBbAQNFYKIyhe1OPoviKt6QtgH6R_pJ
https://photos.google.com/photo/AF1QipP_ZhZiAuoYm4W4ipNArhKmHYQyQaODzyrDzMvA (Top of the house from the street)

 

[gregb]

My guess it that Howard Klahr, a former Texan, might provide a referral to a professional with experience dealing with the Texas tax authorities.

 

[glenn walker]

Interesting never have done one but I did do an-appeal on a Geodesic Dome. I initially tried to find comparable sale's and I even purchased a book written by some appraiser who claimed to be an-expert on weird properties. In the end I gave up on attempting to come up with any hard data but I did know that no typical buyer would pay the same as a traditional designed home because it had a weird round floor plan and no bank would finance it so I went to plan-B

Plan-B I decided to forget trying to get it appraised and called a local agent I knew and paid her $200.00 to take her best shot at coming up with what she believed it was worth. She took some photos and then simply wrote a letter on her company letterhead explaining that Geodesic Domes are rare in this area and have very little appeal to most buyers because the design and floor plan is unappealing and she estimated a 40% to 50% discount off similar sized homes. When I showed up for the appeal I took her short brokers price opinion-photos of interior and exterior along with a letter of explanation on her letterhead.

They approved my appeal and frankly I don't think a $1,000.00 appraisal would have done any-better because I doubt any of them ever had been in or appraised a Dome Home.

 

[bnmappraisal]

Thank you all for your insights. They are very helpful.

It looks like if I can get the appraisal reduced by at least 25% it would be financially worthwhile to get a private appraisal, particularly since the reduction in value (percentage) should logically carry over to future years.

Unfortunately, it also is clear such an appraisal would be complex and time consuming. Since the hearing will probably be within 30 days it is probably not realistic to expect to have the private appraisal done within that time frame. I am sure any attempt to do so would result in a higher, possibly much, fee, which is understandable. Possibly a better idea to plan for next year and take the time necessary to do it right.

This brings up the question of whether or not to even go to an appeal this year, with only the information I have been able to obtain, which may be insufficient. It might serve only to tip off the appraisal district with no tangible result. I know it is not within this group's purview, but would be interested in any comments as to the best strategy.

Thanks again.

Just my opinion - I would try to contact appraisers now and find one (or two?) you're comfortable with/feel are competent in completing the appraisal you're looking for. I would also ask anyone who says they cannot complete the assignment, who they may refer/recommend. That may save you some time/research.

Although I think someone may be able to complete the assignment in your 30 day window, I don't think you're wrong in waiting until next year, either. The closer to your appeal the appraisal is completed, the more credible it will be, IMO. I'm sure almost any appraiser you engage now, who you find competent to complete the assignment, will be more than willing to do it next year for you, too

Just my $0.02

 

[George Hatch]

http://marant1946.blogspot.com/sear...00-07:00&max-results=7&start=14&by-date=false

 

[Terrel L. Shields]

don't agree with some others that this would be a particularly complex appraisal,

The regulated institution shall be responsible for making the final determination of whether the appraisal is complex. If during the course of the appraisal a licensed appraiser identifies factors that would result in the property, form of ownership, or market conditions being considered atypical,​

complex is the bank's call but in my mind when secondary market basically redlines earth sheltered homes, then "market conditions" as well as the unique construction is a complicating factor in valuation.

 

[Mark K]

In my mind F/F and the secondary market are not the final arbiters in making the complex/non-complex decision (unless the appraisal is for them). There are a lot of F/F non-conforming properties that are not difficult to appraise, much less complex.

I think that a lot of appraisers tend to label properties 'complex' when its a lack of experience that makes a property appear complex. I've turned down plenty of assignments that I considered sufficiently complex for me not to have a good comfort level. This would not be one of them.

 

[Deleted member 128537]

I have done a number of earth homes (about 10) in my 20 years. Some of them were more difficult than others; depending upon the type and the floor plan. If there are some windows above grade in the back they appraised pretty much the same as typical ranch homes (at least in my market). We called them “side hill ranches.” If there were no windows in the back above grade then it could pose a problem regarding the functional use of the home. I remember one where none of the bedrooms in the back had windows. That was a problem. I first did it for the estate. And then I did it for a lender as a sale. When I did them for a lender I normally tried to find another atypical sale (like a geodesic home). Best case scenario is I found another “side hill ranch” and used it. On one occasion it took me a month to complete the report. I just happened to run across an atypical sale and was able to use it. Any appraiser that does these must ask the expectations of the client and the client must be willing to let it “simmer” while the appraiser attempts to search for comparable sales. More often than not one sort of happens along a solution to the problem. At least that has been my experience.

But they are not impossible to do. They do however take some creativity. I do appraisals in a rural area where I often run up against odd ball properties. Many appraisers are just unwilling to do this because they never do odd ball stuff. They kind of panic. They aren’t really use to being creative in their analysis.

 

[gregb]

Not sure why the OP's residence should be so difficult to appraise.