Earth Sheltered Home: Appraisal And Comparable Problems

[Carlos Danger]

Glenn's suggestion is the best idea yet. Go and get your feet wet with the tax board. If you lose you can decide if you want to go back with an appraisal next year. I think the house looks good.

 

[Artemis Fowl]

I beg to differ with your opinion. When we built the house we knew what we were doing and built the type of house we wanted. It is very efficient, resulting in monthly costs substantially less than a similar sized conventional house. The mere fact that we were wise ( and brave) enough to be different than the mojority to take advantage of efficiencies has nothing to do with the fact that the rest of society has not yet realized the value in our house. I fully expect that any obsolescence will eventually disappear when the benefits become more understood, but it will take a while. In the meantime there is nothing wrong with taking advantage of a potential benefit in the tax law.

Unfortunately, the rest of society is most of "the market" you need to use to help support your contention...and, for this valuation problem, has a whole lot to do with it. Your position may score points in a tax appeal...get to know your board members to see if that might play for you...or try it and see.

Still haven't answered the cost question...expect that to be asked.

 

[Marant]

In preparation for my hearing I have come across another question. It appears the county appraiser established the size of our house by measuring the exterior dimensions, which is apparently standard procedure. The typical frame house has walls approximately 6" thick, when one considers 2x4 construction plus exterior and interior cladding. Our home, however, has walls that are nearly 12" thick, with 9" of concrete plus 2" insulation and stucco.

Is it reasonable to be concerned that the exterior measurement procedure overstates the square footage of our home?

 

[Carlos Danger]

It can't hurt to bring it up. Check their square footage against your blue prints.

 

[Artemis Fowl]

In preparation for my hearing I have come across another question. It appears the county appraiser established the size of our house by measuring the exterior dimensions, which is apparently standard procedure. The typical frame house has walls approximately 6" thick, when one considers 2x4 construction plus exterior and interior cladding. Our home, however, has walls that are nearly 12" thick, with 9" of concrete plus 2" insulation and stucco.

Is it reasonable to be concerned that the exterior measurement procedure overstates the square footage of our home?

Nope. That IS the measurement procedure that establishes the square footage of your home. I'd be more concerned if you were treated differently than everyone else. This is one reason why cost is an important consideration. Cost of an equivalently measured stick-built vs. your construction type. Still avoiding this question...why?

You appear to be expending considerable effort in your preparation and I commend you for it. I hope you view my responses as helpful to that process...because that is my intent. I have witnessed hundreds of presentations to review boards and been Respondent to state level appeals.

The evidence leads where it leads and I am trying to give you realistic responses that you may have to contend with. A goal oriented approach to this can be frustrating. To keep perspective, periodically ask yourself if you would actually sell the house for what you are contending it is worth to the review board.

 

[Terrel L. Shields]

I can think of a number of situations where replacement cost would have absolutely no relation to value.

Then you do not understand the cost approach. Replacement cost new less ACCRUED depreciation from all sources plus land value. Land means the site value which includes view, location, and any restrictions, etc. Valued "as if vacant and available for its highest and best use". The replacement, rather than reproduction cost, should cure most functional issues (e.g.- no one builds a new house and converts the garage into a den during construction) so only short term FO - roof, etc. is considered. External obsolescences are much more difficult to estimate, and assessors frequently ignore it. Physical depreciation, of course, continues.

Other price variables are rarely attributed to the real estate rather are related to business enterprise values (BEV), " blue sky", "management" or "ongoing concern". These are intangibles unrelated to the actual real estate. In the case of liabilities against a property being higher than the value of the RE, then value is apparently less than zero. An example would be a contaminated site where clean up costs exceeds the value. Many old lots in big cities had tax burdens and back tax bills that exceeded the value of the place. Since most states tax sales required a minimum bid of at least the tax's due, these lots became unsaleable. States had to relent and zero out the back taxes in order to get someone to bid on them and get it back onto the tax rolls.

 

[Renee Healion]

In preparation for my hearing I have come across another question. It appears the county appraiser established the size of our house by measuring the exterior dimensions, which is apparently standard procedure. The typical frame house has walls approximately 6" thick, when one considers 2x4 construction plus exterior and interior cladding. Our home, however, has walls that are nearly 12" thick, with 9" of concrete plus 2" insulation and stucco.

Is it reasonable to be concerned that the exterior measurement procedure overstates the square footage of our home?

You will not do well going in and arguing against standard procedure. The assessor's job is to treat every property evenhandedly. They demonstrate that they are doing that by using standard procedure. The exterior measurement is the exterior measurement. Arguing that you should be treated differently is not the way to go, in my opinion.

You save on energy by your own efforts and design choice but you do not save on taxes at the expense of other taxpayers. Keep in mind that assessors are always dealing with everyone's property when they deal with one property. If you, and owners who build like you have, want to be recognized for your conservation efforts as a public service, perhaps you could advocate on the state level for incentives or credits that can apply to taxes. I think you will only get a nominal adjustment as a courtesy from an assessor, by this strategy, if your state is like mine.

 

[George Hatch]

Notwithstanding everything else, the pricing in the area for recently built homes in your size range seems to be in the $400k range. Whatever your value dispute is with the assessor I'm not sure that it would be a productive use of your time to argue the assessed value with them.

As for the market value, if you put the house up on the market you might get a little spiff for all the green features but it's apparent you won't recover your costs. They almost never do.

 

[Marant]

Nope. That IS the measurement procedure that establishes the square footage of your home. I'd be more concerned if you were treated differently than everyone else. This is one reason why cost is an important consideration. Cost of an equivalently measured stick-built vs. your construction type. Still avoiding this question...why?

You appear to be expending considerable effort in your preparation and I commend you for it. I hope you view my responses as helpful to that process...because that is my intent. I have witnessed hundreds of presentations to review boards and been Respondent to state level appeals.

The evidence leads where it leads and I am trying to give you realistic responses that you may have to contend with. A goal oriented approach to this can be frustrating. To keep perspective, periodically ask yourself if you would actually sell the house for what you are contending it is worth to the review board.

Thank you, that is the information I was after. I do not want to waste any time before the Board on things that are incorrect just because I do not know the normal protocols.

 

[Marant]

I want to thank everyone for their responses. They have all been very helpful in educating me in some small measure on how the appraisal profession operates. At this point I do not think I have anything to lose by going to hearing (it is apparently unheard of here for the Board to increase a valuation). I am sure it will be an interesting exercise, as well as educational.

Will post results next week, regardless of what they are, with my impressions of the process.

Thanks again.