Tiny home on acreage question(s)?

[Mr Simple]

I want to put this out there. Has anyone ever appraised a tiny home (~600sf) on acreage? I am trying to get a grasp if it is even possible to produce a credible report. There are no specific “tiny home" comps. This is rural property, less than a year old, a new solar system (no electric to the property). There are comps that are stick built, but tend to be older. No solar-only comps. Is it possible to create a credible report comparing to traditionally built homes. I am getting conflicting answers from other appraisers I know, none of which have done an appraisal a “tiny home” specifically.

What is the best way to approach this? Turn it back to the AMC because I can’t produce a credible report(?), or does anyone have any experience with this type or similar situation that can share some experience? Thanks in advance.

 

[TerryRohrer]

More questions than answers:
How much acreage?
What is the approximate value of the acreage as if vacant?
Is the tiny home site built, or moved in on typical trailer frame?
If on a trailer frame, is it off the wheels and on a foundation, or otherwise anchored to the land?

As always, the more you can help us understand the problem, the more meaningful the help you will get.

 

[Mr Simple]

5 acres
~100-125k if vacant
The tiny home was moved and is now on a foundation, anchored to the land.

 

[alebrewer]

Seems to me it might be a potential H&BU issue... I always look to the market to see whether or not a particular use is acceptable in that market. And by that I mean that I look for sales of similar properties. If there really are no sales of 'tiny homes' (however that is defined) on acreage, then that could be the market telling you that use is not an option for H&B...

 

[Mr Simple]

Thanks for the reply. I've had multiple appraisers, none of which have ever done a "tiny home" appraisal, state that we need to know the market reaction to the tiny home vs a similar stick built. I am trying to reconcile this in my brain that if somebody built the same home on site on the 5 acre lot next to them... why would there be a difference in value.

There are smaller homes in the area that are stick built, but no recent sales...Have to go a bit farther out, and the properties tend to be older.

I feel like since this is new construction in the last 6 months, the most weight to the cost approach could produce a credible result?

Thank you for the help, by the way. I appreciate it.

 

[TerryRohrer]

Just had one near here listed for $239,000 and sold for $246,000 with about 645 ft² GLA on about 1.06 acres with public electricity, septic, and cistern, plus a smallish shop (est. about 800ft²). All built about 2016. Built elsewhere on trailer frame and moved in. County data suggests it is on a block foundation, but it was skirted and dirt banked up to near the sill plate so I would call it attached to land. Most recent vacant site sale was 1.2 acres with electricity and a graveled pad that sold for $110,000. Another lot with a shed, cistern, septic, and electricity sold about the same time for $120,000. All 3 sales in summer of 2022. Six months earlier, lots sold for $51,000 and $68,000. For context, a 1,320 ft² home built in 1977 with a half basement and detached garage sold for $350,000 two months later than the tiny h ome, arguably in a superior location even though a third of a mile away. A year earlier a 1,400 ft² ranch with full, mostly finished basement and attached garage on an acre with electric, cistern, and septic sold for $450,000, similar location to tiny house.

I did not appraise the one noted above, but did appraise a 1,000 ft² square foot site-built home (with a half-basement) in the area and wouldn't hesitate to use site-built sales to appraise that tiny home. While the concern about market acceptance is valid, such questions can't be answered without data. I would expand the area of consideration and ensure the physical characteristics are bracketed as well as you can.

There is not a chance I would rely on the cost approach.

 

[alebrewer]

This is why site to value ratios are so important to users of appraisal services. The principle of balance holds that balance is achieved when the combination of land and improvements is optimal - i.e., when no marginal benefit or utility is achieved by adding another unit of capital (which is when the law of diminishing returns kicks in). When combined with the laws of contribution and conformity, we have the backbone of H&BU analysis. When site to value ratios are out of step with market activity, one or more of the above-noted laws is probably not being met.

 

[Terrel L. Shields]

The cost approach works. But if doing it for secondary market, I would just turn it down. Sounds like stip city. I have one now that is a shanty on 2 acres - its value is the land - 100%. I am doing it for an gifting involving a charitable trust.

 

[Terrel L. Shields]

none of which have ever done a "tiny home" appraisal,

Gosh. They need to get out more... I've probably done 100 or more since 2000 of less than 1,000 SF

 

[Ariba]

The foundation must be certified by an engineer and the Tiny House must be titled in the municipality it is located as real property. If not, it is personal property.