Questions about outbuilding value

[BRCJR]

Suffolk County

That is an active enough market for equestrian properties. I would think there should be a decent supply of comparable property transfers.

 

[brokenokie]

That is an active enough market for equestrian properties. I would think there should be a decent supply of comparable property transfers.

I think the main issue is that most of the equestrian properties have nicer houses on them that don't comp well, even if their outbuildings do. The contract price for subject property is 450k.

 

[TerryRohrer]

...the main issue is that most of the equestrian properties have nicer houses on them that don't comp well, even if their outbuildings do.

In a nutshell, this is the task for which appraisers exist. The issue has become that it is simpler to say "no value" and move on with your $450 fee than to actually do the work. Of course, the lenders are culpable as well...they can sell more loans more quickly when they tell borrowers "their" appraiser only charges $450 for a $1,500 appraisal (the fee necessary to accomplish a credible job). When it matters to them, the lenders are happy to spend borrowers' money to ensure a competent appraisal.

 

[J Grant]

I think the main issue is that most of the equestrian properties have nicer houses on them that don't comp well, even if their outbuildings do. The contract price for subject property is 450k.

FWIW, lenders like to lend on houses, not on outbuildings.

Though the appraiser might have shortchanged the value of the outbuildings,? Maybe, maybe not.

However, you recognize the appraiser might have also selected the best comps based on the size and quality of the houses. Which is why none of us here on the internet can say the appraiser did a good job or did a bad job. Many factors combine to make a value opinion credibly supported.

 

[Tim Hicks (Texas)]

In a nutshell, this is the task for which appraisers exist. The issue has become that it is simpler to say "no value" and move on with your $450 fee than to actually do the work. Of course, the lenders are culpable as well...they can sell more loans more quickly when they tell borrowers "their" appraiser only charges $450 for a $1,500 appraisal (the fee necessary to accomplish a credible job). When it matters to them, the lenders are happy to spend borrowers' money to ensure a competent appraisal.

When you properly value outbuildings it can bake that square peg hard to fit in the round hole that AMCs or lenders expect. I am constantly out of the of guidelines on rural properties for this reason among others. They don't like it. I am constantly stating that the property characteristics are not the appraiser's fault, but valuing them correctly is a requirement no matter what their lender guidelines for adjustments may be.

Property sales with 5000 sf barns, pools and arenas are not a dime a dozen like they expect. You can have one with a similar barn but a much larger or smaller house, or large acreage difference, one with a pool, one with an arena and a smaller barn. Its potpourri for the appraisal assignment.

 

[BRCJR]

FWIW, lenders like to lend on houses, not on outbuildings.

Though the appraiser might have shortchanged the value of the outbuildings,? Maybe, maybe not.

However, you recognize the appraiser might have also selected the best comps based on the size and quality of the houses. Which is why none of us here on the internet can say the appraiser did a good job or did a bad job. Many factors combine to make a value opinion credibly supported.

Maybe find an agricultural lender. We/They like to lend on land with outbuildings (farm type improvements). It is all about what the lender understands.

 

[Zoe]

If buyer and lender can't work it out, I would walk if I was seller based on what little I know about the appraisal. I have a strong feeling the buyer really wants this property.

My inclination is site improvements are undervalued. I have a feeling buyer and agent will work with lender on ROV and/or 2nd appraisal.

 

[Zoe]

Just a gut feeling. I am not appraising the property. I'm home free.

 

[Tom D]

Thank you all for your help and insight. Anyone who wants to leave your address will receive a Christmas card this year!

I'm expecting a $5 card. It better not be a $4.50 one.

 

[Dublin ohio]

When you properly value outbuildings it can bake that square peg hard to fit in the round hole that AMCs or lenders expect. I am constantly out of the of guidelines on rural properties for this reason among others. They don't like it. I am constantly stating that the property characteristics are not the appraiser's fault, but valuing them correctly is a requirement no matter what their lender guidelines for adjustments may be.

Just turned one in that had a six figure downward outbuilding adjustment on a $1.6M comp. Very strict lender. Never heard a peep. The comp outbuilding was 7800 sf. But the home and acreage were good comparisons