Pending projects impact on appraisal value?

[Tom4value]

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

Yes, very easy ways. Talk to realtors, mortgage lenders and attorneys. All use appraisers. In fact, start with realtors. They use appraisers to get a value on properties that they want to list but have odd ball characteristics that they themselves find difficult to put a value on.

My take on your situation: It is more of a marketability problem than a value problem. Buyers will love to buy and pay for a house with top notch amenities but will hesitate because of the work involved. A good way to help with the hesitation is to come up with a cost to bring that backyard to livable space. That way you can show a potential buyer exactly what they will be up against if they buy. Then, arrive at a value assuming it is done and subtract out the cost to complete.

I know the buyer is you but this is what you can present to his side.

 

[KHS445]

Lots of good advice. A competent appraiser should be able to provide you with an appraisal the will estimate the value of the subject, if completed along with an estimate of the cost to cure various projects. Personally, I would recommend filling in the pool are as the cost to complete will not be realized in market value in Michigan. I would also bring in a builder and/or home inspector to completely go thru the existing structure to make sure everything is up to code, all needed inspections have been completed and approved, that all required permits have been obtained, to let you know what they fell needs to be completed, etc.

As others have stated the appraiser’s estimate of value is most generally based on gross selling prices. The seller is going to be responsible things like real estate commissions, owners title policy, transfer stamps, shared closing costs, possibly survey, corrections based on buyer’s home inspection, property tax proration, attorney fees, special assessments, condo fees if it is a site condo, etc. These expenses could add up to 10% or more of the appraised value. To say nothing of the capital gains tax you could be responsible for should you decide to sell the house. The other thing I would be careful of is supplier and/or labor liens. There maybe some outstanding bills from people who may file liens, or even friends who did pro bono work and are now going to file a lien for their services.

If the other sides believes your offer is too low and want you to pay more, you can say ok I will sell my interest to you based on your appraisal. Sounds like they may not be able to do that so that would only improve your bargaining position. Was a lender involved initially, if so what was the original estimate of value based on your plans and specs? That may be the person to discuss a cost to complete value.

There used to be an appraiser who was active on the forum and I believed to be very knowledgeable. He works SE Michigan, but I am not sure if he works in your specific area. His handle on here was Michigan CG.

Chances are good if you honestly explain the situation to any appraiser, many will probably turn down the assignment as they want to avoid possible depositions and court appearances.

Good Luck

 

[Fernando]

Back in the days of the Great Recession, there were such fixer uppers.
Contractor would buy a fixer and was doing major demolishing and renovations left unfinished.
Because of the downturn market, contractor knew after renovations, the money spent into property wouldn't bring profit when sold.

I was interested in buying such a "bargain" property based on my cost estimate.
However, I would lose the bidding to other contractor buyers who could do the work themselves at lower cost. Thus value really varies depending on the type of buyer.
I doubt appraisers would be able to get an "accurate" appraisal based on your unique situation if costs (hard and soft and permit process) are significant.