SFR on 5 Acre Parcel, ~3 Tillable

[Rufus]

Appraisal request is for cash out refinance to be reported on form 1004 for a single family residence.

I have not accepted the assignment as yet.

Per the zoning office, the land is zoned agricultural and the residential use is permitted. Approximately 3 of the 5 acres is tillable crop land. My thought is that this will have a different value than wooded or scrub brush comparables.

My local 'sounding board' appraiser says to just mention that there is tillable acreage but that it is insignificant and simply ignore it with regard to selecting comparables. He says crop rights rent for roughly $25 per acre per month and because this is such a low amount on a yearly basis that is does not have an impact that needs addressed in the sales grid.

If this is a complex assignment, as I think, then I will turn it down. If it is 'simple', as he says, then I will do it. What would you do?

 

[Michigan CG]

With three acres tillable you could hardly turn a combine around three or four times. It is insignificant, just a little extra land.

 

[Rufus]

With three acres tillable you could hardly turn a combine around three or four times. It is insignificant, just a little extra land.

Thanks! Combine turning won't be a problem, the neighbor's is the same parcel layout and then about 20 acres to the north and 10 or so beside the neighbor make up the whole tillible area.

 

[Mike Kennedy]

residential use is permitted.


Considerations:

Does it transfer on sale?

What is minimum single fam res lot size (if any) Excess vacant land ???

Does the market indicate similar 1sfr use in close proximity?

HBU may indicate SFR IS "as-is" OR vacant Agri parcel.....

 

[CANative]

You've got to have some pretty cheap land to make a few acres of beans or squash pay more than for a residential homesite.

 

[Rufus]

residential use is permitted.


Considerations:

[1] Does it transfer on sale?

[2] What is minimum single fam res lot size (if any) Excess vacant land ???

[3] Does the market indicate similar 1sfr use in close proximity?

[4] HBU may indicate SFR IS "as-is" OR vacant Agri parcel.....

1. According to my local guy, most are year-to-year but I will check to see if a long term lease is in effect.

2. Minimum to build on is 2 acres.

3. Yes, the neighbor parcel for one. About six others within 1/2 mile. And several more within a mile.

4. HBU is most definately SFR as the subject is pretty much surrounded by subdivisions and minor plats of SFR along the road frontages. Build up within a one mile radius is about 60/40 between residential and agricultural and was one of the fastest growing areas when the hammers were flying. The subject is one mile south of the Indianapolis city limits in an adjacent county.

 

[stefan olafson]

Sounds like maybe the neighborhood may have similar properties. Maybe the three acres are farmed so the owners don't have to mow the whole darn thing? I think it's a simple assignment, jus find other sales and when you verify them find out if any significance was given to the extra acreage. These types of places are very common in NW Minnesota.

 

[lostinthezone]

I would agree that the farming/income aspect of it adds no value as opposed to grass or treed area. It used to be that for a really small farm, say something between 5-20 acres, the only cash crop worth doing that you could make any real money at was tobacco. That may no longer be the case, but I suspect it hasn't changed. Most of the people who do it at that scale are looking for tax benefits or for fun.

 

[Rufus]

Most of the people who do it at that scale are looking for tax benefits or for fun.

Based on the areial photography, I am making a preliminary assumption that the crop rights are rented to the adjacent parcel to the north since that field extends across the subject parcel and the neighbor's. My initial assumption, and I've never had this kind of assignment before, was that it would be a positive influence that I should address.

 

[Restrain]

Honestly, I wouldn't call this an operating farm. We've got a lot of these, and people might lease out the excess for hay or whatever. The reason is that they get a tax break for "agricultural" land. They're hobby farms at best. The UW doesn't want to make a loan on an operating farm, which this really isn't.

Just comment, state that this is a hobby farm and not a true income-producing farm, but is rather a SFR on typical acreage and go on.