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Geo-Thermal heat

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Tom Curran

Sophomore Member
Joined
Oct 18, 2002
I have a subject that has Geo-Thermal Heating, but of course I can't find andy comparable sales with these. Anyone know what kind of adjustnment should be made to compare to forced air and heat.
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
They are nothing but a heat pump that uses that uses earth/water rather than air as the transfer medium. There are some potential savings in energy costs which will be offset by higher installation costs and repairs costs as time goes by. If it's new construction and the shell is well made they probably don't save much. Where they really make a difference in the monthly utility bills is when they are installed in a big, old, drafty house with no insulation that costs an arm and a leg to heat or cool. As for the adjustment how much do you think buyers in your market would be willing to pay. How much are they willing to pay for extra insulation, a 95 versus 80 percent effecient furnace, etc. etc. etc..

You could capitalize the savings but the client would need to hire an engineer to quantify the potential savings so you could calculate potential contribution to the value. I wouldn't expect much market reaction till energy prices double or better, say sometime within the next five to ten years. There are some Fannie and Freddie loan programs still on the books for energy efficient housing but very few lenders are currently doing anything with these loans. The loans basically factor in the energy savings and increase the payment that the borrower can qualify for. If you are using MSC2 software the forms for the appraiser to calculate the savings and impact on the subject are in there somewhere. I haven't looked at them for at least five to seven years.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
We've done some, including homes that are "sandwich" panels of wood and foam with this type of HVAC. These are not new. I've seen them for almost 20 years now. The costs include a well along with the specialized equipment. As to the valuation, the HVAC installer can provide a reasonable estimate of utility costs vs. normal HVAC. Capitalization of the difference should give you the VALUE difference, which may well be less than the COST of the unit. This is one of those things where Cost doesn't always equal Value. Don't be surprised that you end up with a functional superadequacy unless you are in a high-utility cost area.

Roger
 

Micah O\'Dell

Freshman Member
Joined
Nov 6, 2002
I appraised a home recently with geo thermal heating. I did not make any adjustment due to the fact that the home was close to $1.3 million and it is hard to adjust for every difference in a home of that caliber, especially in Oklahoma. In my case, the market would typically expect to find a great deal of upgrades in the improvements and the geothermal heating would certainly be a plus, but not neccessarily be worth adjusting for, since the market would already expect this kind of upgrade. Certainly account for it in the cost approach, however, I think it would depend on the caliber of house you are dealing with and most definitely, would the market be willing to pay extra for that type of upgrade or would they expect to find it in your type of house.
 
A

Anonymous

Guest
I recently appraised a house with a passive solar design, the owners did not need to use the back up heater at all. After searching the neighborhood and looking at new construction I found no demand for passive solar design and I didn't add a thing for that feature.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Glad it's you and not me....I see a big underwriting problem. Might check with some appraisers up in Wyoming around Yellowstone or maybe Hot Springs Arkansas where that type of thing might be more common. I understand it very common in Iceland too.

Sitting here wondering if Iraq will have thermal heating soon????
 
B

Bemis Pownall

Guest
I dont know what the heck Ive got.
Small boiler, some radiant, some infloor radiant and then
THIS BIG CONCRETE STORAGE THING. It has one 6" white tubing coming in or going out of it near the top and has one 1/2" copper water pipe sticking out the top going somewhere, there is a submersible pump in it. Storage tank is about 8' x 6' oval shape, about 5' tall, glued concrete lid on it. No solar panels. Home is relatively new so i doubt there was ever any solar panels..Perhaps thermo heat?? Mountain home northern exposure..??
Any ideas??

FUN PART

This home is vacant. Appears to be built by an electrician or engineer.
One small bath has 6 light switches in it.

OK DEPART TO THE THE FUNCTIONAL PART

Two bedrooms on main level and they have 3 doors/entrances EACH!. Bath(with all the light switches) is across a livingroom (area) and right next to the front door!

Kitchen is upstairs. Triangle shaped master bedroom upstairs too, some familyroom thing(Upstairs) which is a 5 sided room with 3 sides windows- think this room is were the infloor heat goes(views from this windowed room are of the hillside and trees-why all the windows?)

Long narrow master bath(good for one person at a time), again a ton of light switches. Subject is about 4,000sf+/- Im guessing.

Garage has a door for 2 but could house about 3-4 cars.

Views is to die for..

Cedar sided and good job. Wood double pane windows all the way around.
Good quality throughout.

Guess what.....
foreclosure,
cant sell it.
Some techie engineer with more credit than sense(or use to have).
Icky assignment. Did the house across the street 3 months ago-
guess what...foreclosure too.

Kicker is
There is a $500k spec being built on the same street and there are just a ton of listings in this immediate area. Buyers market or a wild ride for home values??


:icecream:
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
As to your oddball, consider cost to convert back to normal heat/ac and remove the whatever-it-is. If you don't know what it is, John Q. Buyer sure isn't going to know and will not want to take it on. Therefore, not only do you have a cost to cure, you have the market resistance to have to convert it back ($$$$$).

Just because someones building a $500K home doesn't mean the market's at that level.

Roger
 
B

Bemis Pownall

Guest
The foreclosure across the street was $300+/-
Im thinking $30-40k to put subject back to normal floor plan.

Subject was listed $499
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
You've got a mess, that is what you have. Good luck!

 
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