Out of Option, Need Help!

[Zoe]

An appraisal gives an opinion of value. They did not complete an appraisal.

 

[Elliott]

Mr. Goodwin,
What I'm not understanding is what comparables the appraiser used. Are the comps similar farm-style properties that have similar HBU as 'commercial.'
From the photographs, you've got a lot of out buildings. When you made application did you disclose that there was a 3000 sf house and 15,000 sf of out buildings? What would be useful would be a pdf of the report. The properties I've done had small arenas, but usually not more than eight stalls. What did the prior owner use all those outbuildings for? It looks like the set-up is more complex than a SFR with a hobby arena.

 

[andrew81]

This looks exactly like the typical rural residence that are in my market. These easily consist of at least 30% or more of my assignments. Clients include secondary market, FHA, VA, and Rural Development.

FNMA/FHA/VA/USDA and other mortgage participants will lend in rural areas provided the property is primarily residential in nature and use.

Rural residential properties often have characteristics that present difficulties for appraisers in suburban and urban markets, such as unique building types, substantial distances between properties, large lot sizes that may include farmland, and non-public utilities. General lack of density, lack of sales comparables, and wide range of home designs requires an appraiser with experience in these markets. Qualified appraisers who understand the characteristics of these markets are essential to understanding the appraisal requirements.

Determining highest and best use for rural areas can be challenging. Zoning, land use, property type, and other influences must all be considered, in addition to property condition and marketability. Many rural properties have mixed use, mixed zoning or other unusual characteristics that can make it difficult for inexperienced appraisers to develop. Properties may be located on large parcels of land, and/or have numerous outbuildings with secondary uses that are not residential in nature. In addition, property improvements may be very unique and not easily compared with available market data.

 

[Dublin ohio]

The appraiser did the HBU, he didn’t just turn it down with no context - would that qualify enough for getting paid for the appraisal?

I have to question how the appraiser came to a commercial HBU. Can't imagine that the typical buyer is looking for a true commercial use property in an area as rural as that. Plumber, hvac, electrician. That is even common in my area. But for the most part. When the business leaves the building. What you have left is a nice outbuilding with a couple of room used for offices. Would seem to me that most of the typical commercial demand would be in or close to Timberville or Broadway. Typical in my area for small rural towns.

 

[Dublin ohio]

Mr. Goodwin,
What I'm not understanding is what comparables the appraiser used. Are the comps similar farm-style properties that have similar HBU as 'commercial.'
From the photographs, you've got a lot of out buildings. When you made application did you disclose that there was a 3000 sf house and 15,000 sf of out buildings? What would be useful would be a pdf of the report. The properties I've done had small arenas, but usually not more than eight stalls. What did the prior owner use all those outbuildings for? It looks like the set-up is more complex than a SFR with a hobby arena.

From the listing I posted. It has the newer 30 x 50 building a 40 x 60 indoor arena and a relatively small horse barn. Part of which is a lean to. Maybe 5000- 6000 sf of outbuilding in all. Why do I suspect the appraiser just looked at what the 30 x 50 building was being used for and flew with that

 

[Surf Cat]

Where's the listing and selling agents in all this? The OP is doing all this leg work that the agents should be doing.

The OP obviously qualified for the loan. An agreement with the seller was made, contract signed.

Everybody involved in this transaction is signing contracts and other legal documentation. The lender is typically listed in the documentation. Wouldn't the commercial agent know that particular lender didn't do commercial loans? That is, if the property’s H&B Use is indeed commercial.

Something's off....

 

[Raven59]

This type of property is quite common in my area. It is usually sought after by people who love horses or want a farm-like environment without the obligation of significant agricultural responsibilities. The buildings you described are important in attracting potential buyers but are seldom used for commercial purposes. I live in a state where most rural areas don't have zoning regulations, so any use is allowed. However, commercial use is rare. You have a hobby or small-scale farm with all the appurtenances a buyer seeks for pleasure, not business.

You might be having difficulty finding an appraiser due to the location and the low fee the AMC/lender is offering for the work required to complete this assignment. Your lender could increase the fee amount to attract someone qualified. In my area, no one would accept this job due to the low fee rather than because of the lack of qualifications.

 

[djamesgoodwin]

Mr. Goodwin,
What I'm not understanding is what comparables the appraiser used. Are the comps similar farm-style properties that have similar HBU as 'commercial.'
From the photographs, you've got a lot of out buildings. When you made application did you disclose that there was a 3000 sf house and 15,000 sf of out buildings? What would be useful would be a pdf of the report. The properties I've done had small arenas, but usually not more than eight stalls. What did the prior owner use all those outbuildings for? It looks like the set-up is more complex than a SFR with a hobby arena.

I did indeed show the property to the lender beforehand.

It is a 1500sqft building, a horse barn that is about 900sqft but very minimally built, and a covered arena that is 40x60, dirt floor.

 

[djamesgoodwin]

This type of assignment is certainly out of my wheelhouse and I don't have the competency to pull it off compared to where I am.

Having said that, did you voice your concern to the lender and selling agent, whom in turn could forward your concern to the AMC?

We as appraisers, especially from AMC's, get ROV's (reconsideration of value) all the time.

Bi*ch, moan, complain, run your fingernails down the chalkboard, and don't stop until you get a satisfactory resolution. Tell the lender you want a local appraiser to review the AMC one. Tell them you want another appraisal, tell them the H&BU analysis was unclear and you want an explanation. Keep going and don't stop....the squeaky wheel gets oiled...

That’s my plan! Thus why I wrote here to get opinions - I wanted to be sure I wasn’t blinded by being the buyer who really wants the property. This has all been so helpful and I’ve already collated all this info and more and reached out to the AMC, the lender, broker, agents etc. And I’m planning on making noise until this get sorted out properly

 

[George Hatch]

Not to be argumentative, particularly because I’m asking for advice… but it does seem like you’re a vast outlier here. It appears that most if not all but you, here, share the feeling that this is not a commercial property, nor would the value of the commercial style building make up 50% of the value of the property.

Being objective, is it not possible that the original appraiser felt this was too complex from the outset, but happily took the $630 and essentially made up an excuse as to not delve further into a more complex report?

Maybe I’m missing something, but it seems the guy got paid to draw up that report, and he certainly did. He drew up one that let him off the hook yet retained his payment.

That seems every bit as likely as the opposite scenario you contend.

You would have no way of knowing this, but Terrell mostly appraises rural properties including working ranch operations in Arkansas and Missouri so he knows that end of it very well.

I think the disagreement among appraisers is colored by the vagaries of the different types of markets they work in and what the different sets of buyers and sellers are doing with these properties. As I said before, all real estate is local so what I see in my region (Southern Calif) won't necessarily translate equally everywhere else. And vice versa.