Pending projects impact on appraisal value?

[RedheadedStepchild]

My house was built in 2023. My fiance and I are splitting up and trying to agree on home value/equity so I can essentially buy him out of his portion of the house. He is the builder and therefore has a lot more knowledge in real estate than me, so I’m trying to be as educated as possible.

Our home should be worth top dollar for the area based on all of the customizations and upgrades, but the backyard is still basically a construction site - dirt, piles of excavated dirt, and a giant hole with styrofoam molds for a pool he was going to build that probably won’t ever be built now. Additionally, the basement is still completely unfinished, which isn’t terribly problematic except that the staircase is open all the way down to the basement.

How do these things impact home value? He doesn’t believe they impact appraisal and that the home should still be valued at top dollar for the area, but I can’t wrap my head around how anyone could pay or justify paying top dollar with a dirt/hole backyard….

New to this site as of today when trying to find answers to this question, and I truly appreciate any insight you can provide!!!

 

[shrubberyvaluation]

My house was built in 2023. My fiance and I are splitting up and trying to agree on home value/equity so I can essentially buy him out of his portion of the house. He is the builder and therefore has a lot more knowledge in real estate than me, so I’m trying to be as educated as possible.

Our home should be worth top dollar for the area based on all of the customizations and upgrades, but the backyard is still basically a construction site - dirt, piles of excavated dirt, and a giant hole with styrofoam molds for a pool he was going to build that probably won’t ever be built now. Additionally, the basement is still completely unfinished, which isn’t terribly problematic except that the staircase is open all the way down to the basement.

How do these things impact home value? He doesn’t believe they impact appraisal and that the home should still be valued at top dollar for the area, but I can’t wrap my head around how anyone could pay or justify paying top dollar with a dirt/hole backyard….

New to this site as of today when trying to find answers to this question, and I truly appreciate any insight you can provide!!!

Curious as to why you want it to be worth more when you are buying your fiance out of his portion of the house? As for the question at hand its going to be market specific.

 

[CGinMN]

Reasonable appraisers will likely disagree on the magnitude of the impact, as there is no great way to determine the effect on value. Best thing to do is for him to get his crew together and finish the job, then get an appraisal to determine the value. Eliminate the point of dispute.

 

[RedheadedStepchild]

Curious as to why you want it to be worth more when you are buying your fiance out of his portion of the house? As for the question at hand its going to be market specific.

No it’s definitely in my favor for it to be valued for less. He thinks it’s top dollar despite the unfinished projects and he also thinks I should just take his word for it since it’s more his area of expertise….

 

[RedheadedStepchild]

Reasonable appraisers will likely disagree on the magnitude of the impact, as there is no great way to determine the effect on value. Best thing to do is for him to get his crew together and finish the job, then get an appraisal to determine the value. Eliminate the point of dispute.

I figured it was likely to be subjective and arriving on a value we agree with was going to be difficult.
Unfortunately he’s upside down in his other properties so the only way the projects at our house get done is if I fund them 100% which ultimately doesn’t benefit me with the appraisal….

 

[TerryRohrer]

I don't think you are at much of a disadvantage to a builder regarding market value. I haven't encountered many who can intelligibly discuss it. Not because they can't understand it, they simply don't think in terms of value. You would be well served to find a qualified, competent local appraiser (not a buddy of your fiance) to work with you. They will have local data and market knowledge that are necessary.

 

[RedheadedStepchild]

Thank you! Are there easy ways to identify a competent local appraiser?

 

[CGinMN]

Where are you located in Michigan?

 

[RedheadedStepchild]

Where are you located in Michigan?

Southeast - Royal Oak area

 

[Surf Cat]

First off....sorry for your issues and impending split from your fiance. Better now than later. We have a highly regarded member here on the AF that based on your handle.... completely understands (inside joke).

As to your valuation dilemma, there's most likely not any sales that have occurred with partially finished projects such as your pool and unfinished basement. Thus, a quantitative adjustment is difficult to support.

Additionally, you'd have to factor in an entrepreneurial incentive to take on the project and finish it. For example, and this is a hypothetical, if the property in question is worth 500K completely finished and the cost to build a pool is $40k, + the cost to finish the basement is 10k, you're most likely not going to garner 450k. To take on the project, someone is going to want an additional 10 to 20% discount. Whatever the typical percentage is in your area.

So, I agree with your Instinct that the market would not pay top dollar for the project.

Most likely you'll need to get an appraisal and your ex-fiance will get one too and possibly, you two can come to a consensus somewhere in the middle. Good luck.