Old timber barn and appraisal

[JTip]

Yes, but they are telling me to build what I had, a 100+ YO dilapidated barn. NOT happening

Sigh....

This is the amount you have available to replace the barn with 'like kind' materials. One cannot 'reproduce' a 100 year old barn exactly so the insurance company will build you one, with modern materials and design, to have the same utility and function as the old barn.

Your house, for example, due to the age, most likely has horse hair plaster. Now if your house burns down the insurance company will not demand you kill a dozen horses, rip out the hair and mix it in a plaster paste to apply it to your new walls......they will use modern drywall.....

You do not have to find extinct 25' chestnut header beams to recreate your barn, 'LIKE/KIND/UTILITY/FUNCTION'.

I sold P&C insurance for over a decade. I'm not good with cap rates but I do know insurance.

 

[mark hurlock]

Hi, New here.

I have a question, I have lived in my house for 20 years and have the original appraisal and a couple from refinances. I have a late 1800's early 1900's timber barn, 35x45. When I bought the property there was shingles and siding missing off the barn, ( bought the property for the house, not the barn ). I was never able to insure ( as a structure ) because of it's age and shape. I have also been here when the appraisal company's were here and they told me they don't use old barns like that in a appraisal. Now the question, all appraisals state barn under amenities, but no size or value was given as the house and garage sizes and a value were put on the appraisals. Now after 110+ years the barn collapses under snow load, and I find out I have a rider on my insurance that covers external structures up to a certain amount, ( 21000.00 ) for the barn. Because off all the fraud with insurance my mortgage company had to be a endorser on the check. They claim they have interest in the barn as it is listed with no value, they also called it a pole barn. Now they want me to build the same, but if the size and value are not on the appraisal do they have interest? Again, been told old barns like that are not used in a appraisal, and my bank is holding 2/3 of the money. And yes I am building a new pole barn, just not that size as the old barn was never really usable in it's shape. I also want to add the original appraisal said the barn appeared to be used as a garage, second appraisal mentions nothing and the last appraisal states ( Functional taken for buyer resistance to older barns), which nobody understands that statement. I keep rambling on, 2 out of 3 don't even show a picture of the barn, showing the appraisal service is not interested.

Thanks for your help
Jon

The lumber from that old barn may have salvage value to companies that reclaim old wood. We have several such companies around that make some nice furniture from old barns. Don't let them scrap it without checking into it.

It is true, if there is a lien against your property, it includes everything, unless it is personal property, regardless of contributory value to the property.

Many insurance policies are for “replacement” not contributory value and they may require you to actually replace the structure to collect the insurance money. Check with your agent.

As far as the previous appraisals, simply saying appraisers give no value to old barns is false. If an old barn can be proven to have value through market comparison of similar sales, then it has value. What is likely is that there were no available sales to prove a contributory value and therefore, your lender would not lend money against the barn. This is not the same as saying it has no value.

In my opinion, you should consult a lawyer to help resolve the disbursement of funds issue.

Hope that helps.

 

[William Little]

demo vs salvage

The cost to demolish the old barn is probably virtually equal to the salvage value of the materials. Check with some demo guys around there and see if they will give you anything for the old timbers above and beyond the cost they will charge you for scraping the site.
Reading through the previous posts I notice a disconnect between what people are saying and what others are hearing. Compare the definition of value in the prior appraisals to the definition of value stated in your insurance policy.
You can get an insurance policy for a collector car or a classic car under renovation, but I don't know about a policy for a rusted out junker in the back 40. The guy that insured your old barn for $21,000 took a heck of a risk. Based on your description it was 100% depreciated and had a remaining economic lifespan of zero years.

 

[JTip]

(boring insurance stuff)

A standard ISO homeowners policy (HO3) coverages are as follows:

Coverage A: Main dwelling
Coverage B: Detatched units (10% of coverage A)
Coverage C: Personal Property (50% of coverage A)
Coverage D: Loss of use (25% of coverage A)

The op said the detached structure (barn) has 'automatic' coverage per his HO policy of 'up to' $21,000 for the REPLACEMENT of any covered loss. This tells me the REPLACEMENT cost of the op's house would be $210,000 per the policy.

Not a check, not folding money in the back pocket, to REPLACE.

If the op had a sweet 4 car detached with heat and AC and had a total loss, his current policy would only pay UP TO $21,000 for the garage even if the cost to rebuild would be $50,000.

Build a new barn with the $21,000 and be grateful that the insurance company is paying anything for the dilapidated 100+ year old barn that apparently every appraiser in town said was worth NOTHING.

You hit the lottery. Quit whining.

 

[Terrel L. Shields]

Again, been told old barns like that are not used in a appraisal

Anything that contributes value to the property should be valued appropriately. Few appraisers know squat about the contributory value of a barn....

when the bank says build what you had, I have a problem when it was never of value on a appraisal

switch banks....

A small lot with an old barn is generally however, not the appropriate building. On a larger farm, the contributory value (in market) may be greater.

The issue is that insurance insures a building based upon its cost (or cost less physical depreciation) The market may consider the barn obsolete for its purpose (agriculture) and thus its MARKET contribution is low. But its COST to replace is high.

So yes, Insurance VALUE is not the same as MARKET VALUE. And the contribution, while possibly zero, has absolutely no relationship to the COST (or cost less depreciation.)

You may pay for an appraisal, but the appraisal is done for the bank and the appraiser gets paid by the bank. The report is theirs. You are not an defined "Intended User" - a term that has a specific meaning. The government requires the bank to value the property they hold. We, as appraisers, have no direct obligation to the borrower. Sorry to break that news to you.

 

[lightboy363]

Ok guys, thanks for all your input. I guess you have to go to college for banking, appraisals, and insurance to understand all this as a home owner. Either way, I have a Amish crew coming tomorrow to dismantle the rest of the barn and take the beams and what not for a flat even trade up, that works for me, I was quoted 5000.00 to knock it down and left in a pile a few years ago. A new barn will be built to my taste and needs and if the mortgage company don't like what I have done, then they can keep the balance of the insurance money towards the loan. And to JTip that said if I have a luxury 4 car garage it would only be covered to the 21000.00, NO, I have that insured separately. My whole point was the appraisal not showing value and bank interest if you read this whole thread. That's why I came on here to ask. And to Michigan CG, yes, I have talked to that many. As I have lived here 40 years and everyone knows me and knows what the barn is/was, all asked the same question, what the hell business is it of the bank on what you build, They should have no interest in that if they did there homework, knowing I had a mortgage, was even asked that today by a few people, hense I guess you have to go to college to know all this. O WELL

Thank You,

Jon

 

[mark hurlock]

I have a Amish crew coming tomorrow to dismantle the rest of the barn and take the beams and what not for a flat even trade up, that works for me, I was quoted 5000.00 to knock it down and left in a pile a few years ago.

Jon

Just curious, do you know what kind of lumber you have?

Sounds like the guy trying to charge you $5K was ripping you off.

 

[lightboy363]

Red oak beams and unsure of the grey weathered siding, (Cyprus) maybe, the siding we will keep most of it.

 

[mark hurlock]

Red oak beams and unsure of the grey weathered siding, (Cyprus) maybe, the siding we will keep most of it.

So not only are the Amish removing the oak for free, you get to keep the siding.

I always said a good deal is good for both parties involved.

That reclaimed oak would make some nice furniture. I have a custom made table with 100+ year old ¼ sawn white oak. Can't buy it in any store. Some believe the quality of wood used for furniture is determined by how much you can afford to import rare species but I think it is equally appreciated by what is indigenous to your region. Pine is fine if you know what I mean. But who knows that oak might end up in a new barn.

This was a good topic and I appreciate you sharing it with us. Thank you.

Do you have plans for the Cyprus? Flooring maybe?

 

[lightboy363]

They are taking the whole thing down, taking what they want and leaving a pile of what they don't want. I am fine with this, ( burns quick and hot for summer campfires ) as no contractor would do this in this area. I planned on doing this demolish myself, but with a daughter graduating and getting married in the same year I don't have time to demolish and rebuild. The siding, my wife only wants to make a outhouse out of it, whatever. What ever is left over I will figure out from there, sell, store and reuse later, I don't know.