• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Recent Appraisal On Land With Improvements

Status
Not open for further replies.

animalfriend

Freshman Member
Joined
Sep 17, 2017
Professional Status
Real Estate Agent or Broker
State
North Carolina
We're selling 5.258 acres of property with a well, septic, power, driveway, and a 2000 (model year) mobile home for $45k. The home was not properly winterized and a pipe to the washer broke, damaging the floors. The rest of the home looks like new, as it was rarely used as a vacation property. The roof is good and there is no sign of mold in the home, but there is black mold/mildew underneath, where the floor is rotted (though we acknowledge it could be present elsewhere). We have an estimate of $1000 to replace the plumbing and fix the floor. We already bought the materials, which we're providing.

The property is unique in that it's very secluded and has a strong creek with multiple waterfalls and pooling areas. It's hard to find anything comparable. I did find some land that's only a couple miles away with a creek, but it's a tiny stream with no waterfalls. It's listed for $5620/acre (5.3 acres). The least expensive land with the same acreage that I could find in the same zip code is around $3k/acre, but it's directly under the power lines. Our land does have a deeded right-of-way to it (across a neighboring property), which we realize could affect the value. It also has road frontage, but installing a driveway would be difficult due to the creek. We put a value of $20k to $25k on our land.

The land is fairly steep, but was graded for an "easy" driveway; I access it with my minivan. It has a nice level, cleared site with the home. The rest of the property is heavily wooded. It has a well, septic, and 200 amp power.

A potential buyer just had an appraisal done and we question the results. The total valuation was $30k and the appraiser stated the home needed to be torn down at a cost of $10k. The buyer also got a repair estimate of $1400 and intends to repair the home. She has arranged for the home to be insured at closing for $46,000.

The appraiser said the well/septic add $10k to the valuation. He said they probably don't work because they haven't been used. This is despite the fact that the power is on and we showed the potential buyer that the well does work. I offered to run water into the septic, but the appraiser told her the problems wouldn't become evident for 5-6 months.

He said the power adds no value because all homes are expected to have power. And he said the driveway adds no value because it's not gravel. Actually, it is gravel, but it's overgrown with grass. We feel that the driveway and site prep do add value because there's a significant amount of work that was done in clearing the trees and grading the land. The private part of driveway is ~300 feet and the cleared, level homesite area is 1/4 to 1/2 acre.

We feel the improvements add approximately $25,000 to the land. We've had two wells drilled (different properties) in the area and they cost $7000 and $9000. We had the laterals replaced in a septic and that was $2700 (just replacing laterals that encroached on a neighbor). So we feel $10k is low for the well/septic.We also feel the electric, driveway, and site prep add to the value, as these are all costs that would be incurred, in addition to permit fees (a well/septic permit alone is $725).

The potential buyer is borrowing money from a family member and the appraiser made it a point to tell him that we paid much less for the property than we're asking. I've explained that it was a short sale with extenuating personal circumstances, but I don't feel this is relevant. The appraisal should determine the current value of the land and improvements.

I have not seen the appraisal. This information was provided by the potential buyer. I'm going to look up the book value of the home, but I believe it's at least $15k. If she intends to repair the home for $1400, it's unfair to factor in a cost of $10k to tear it down. Furthermore, I told her if she didn't want it, I'd pay to have it moved to another property and have it repaired myself. I had also offered to have it repaired before she bought it, but she declined I questioned how it could be worth -$10k when I own it, but instantly becomes insurable for $46k at closing (the amount was determined by the insurance company). She agrees it's worth fixing/insuring, but her family member is making his decision based on the appraisal.

I guess my questions are if electric service and road clearing/site prep are typically factored into a land appraisal. Without them, the appraisal is $30k and he's factoring $0 for the home. We were asking $55k ($20k for the land + $25k for improvements + $10k for the home). We came down to $45k and they want to renegotiate based on the $30k appraisal. We don't want to be unfair to the buyer, but don't want to shortchange ourselves either. We don't need to sell the property and I told her we may just have the home repaired and then sell it, but she wants to buy it now, as-is.

Sorry this is long, but I wanted to include as many details as possible.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
Actual what your asking is for someone here online that is likely not even from that market and never seen the property to agree with your opinions as opposed to those of an appraisal that neither you or anyone here online has seen.

Maybe your best approach would be to either 1) hire your own appraiser and see what they have to say 2) have a local appraiser review the existing appraisal or 3) wait for other offers and see what they say
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Why don't you repair the floors? A obvious problem such as damaged floors are going to cause the market to make a value deduction much greater than the cost to repair them. It sounds like you've improved the property so it should be marketable. Newer manufactured home on 5 acres with well/septic, electric, and amenities of waterfalls for just $45K......its the American dream. Fix the floors.
 

animalfriend

Freshman Member
Joined
Sep 17, 2017
Professional Status
Real Estate Agent or Broker
State
North Carolina
Thank you for taking the time to share your opinions.

I guess I should have omitted everything else and just asked if electric and driveway/site prep add value to vacant land. I'm not asking for an opinion of the value, only if they're typically considered. The appraiser said they add no value. This seemed odd (especially considering the driveway is ~300' and required significant clearing and grading), but I don't know the protocol.

We would have had an appraisal done, but we had agreed on the price of $45k after she (and several family members) had seen the property and discussed it. We were happy with the price, as was she.

We were going to have the floors fixed before the sale. I told her we'd have the work done and add the actual cost of repairs to the total. She specifically asked us not to because she has experience and her brother (who will be staying with her until repairs are done) is a carpenter. They wanted to do the work themselves to be sure it was done right.

At this point, we're in a time crunch. She's not from the area; she came here 9-6-17 and is staying in a hotel. Closing was supposed to be 9-8. It was changed to 9-11 and then 9-15. On 9-13, she said her uncle wanted the appraisal. I got the results 9-15. Immediately, I told her that I thought we should get the floor repaired, so the home could be included, instead of deducting $10k. She's doesn't want to do that and wants to close Tuesday (9-19).

I was just thinking that if the electric and site prep/driveway are typically included in vacant land appraisals, it may make the difference. I already told her that we'd remove the home at no charge if she didn't want it, so the -$10k should not be a factor. So we're at a difference of $5k. I realize without seeing the land, no one can comment on the value of the work that was done. She agrees it would cost more than $5k, but the appraiser said it adds no value. I'm just wondering if that's common practice.

I'm sorry if these questions are unrealistic. I just found out today that she wants to close Tuesday, so I'm trying to get as much input as possible on a Sunday.
 

animalfriend

Freshman Member
Joined
Sep 17, 2017
Professional Status
Real Estate Agent or Broker
State
North Carolina
I thought I'd add that the buyer's plan is to contact her lender/uncle on Monday with the written repair estimate of $1400 (which she obtained after the appraisal), along with a copy of the book value of the home. This will eliminate the -$10k "tear down" fee and add the net value of the home. I'm thinking that should be enough.

If I could point out that the power and road/site prep also add value that was not included in the $30k, it may make a difference to the lender/uncle. Or, I don't know if we're being unreasonable in expecting a valuation for those improvements. Hence, posting here.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
guess I should have omitted everything else and just asked if electric and driveway/site prep add value to vacant land.
rarely .. land is assumed accessible and have utilities. Here they make you pay a deposit for electric, then refund it once a house is on the site. Wells are worth want they cost or what public water would cost to hook up less depreciation... which is normally figured on a short term life (10-20 years).
 

animalfriend

Freshman Member
Joined
Sep 17, 2017
Professional Status
Real Estate Agent or Broker
State
North Carolina
Thanks for the input. I appreciate it from an appraiser's POV. I was looking at it from the view of a layman if we bought the land untouched and had to put it in its current state.

I plan to call the power company Monday and see if they charge to run power or set a pole. The buyer thought they did and I told her I thought they may not. Though as I understand it, the landowner would still be responsible for permits, meter head, panel box (200 amp outside), ground rod, and wire to the home. We're having the service upgraded from 100 amp to 200 amp at our home and the electrician (a friend, giving us a break on the price) said it would be $1100 to $1500 for the upgrade.
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
This seemed odd (especially considering the driveway is ~300' and required significant clearing and grading),

YOUR property required significant grading in order for it to be usable. Did the comparable sales require someone to spend a lot of money to make the site usable?

If I can buy five acres and not spend money to get to the area where it is buildable it is worth more than the five acres where I have to spend money to get to the buildable area.

Looking for an analogy here and this is the best I can come up with on a Sunday night. If you buy a four-unit apartment building that needs a lot of work and is vacant it is worth less than the four unit building that is currently rented. In order for your site to be usable you had to spend money to make it comparable to other usable sites.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks