Well, Septic, Checmical Dumps, Wet Lands Permits.

[Richard Carlsen]

Pam, I agree to a point. It is important to know what effects value. Certainly a malfunctioning septic system is an adverse condition and would be expected by the market to either be corrected or compensated for by a reduced selling price. But there is a big difference between a malfunctioning septic (oozing puddles on the green lawn) and one that did not have a permit drawn to be installed.

The question is: Whose responsibility is it to check to see if all of the mechanicals are functioning and in good repair, all of the improvements are built according to code, all of the proper permits for the property have been drawn, all of the proper disclosures made, all easements and transfers properly recorded?

My contention is that it is not the appraisers obligation to do any of these things. However, once you take on these responsibilities, which are not obligatory, you open yourself to additional unnecessary liability. For that I am unwilling do unless there is sufficient compensation.

Again, I ask the question: Assuming the requirement is for a 1004, where on this summary report form does it have a place to answer the question, "Are the well and septic systems installed up to codes?" Again the answer is nowhere.

This is something that is beyond the Scope of the Appraisal. If the lender requires this type of information, they can have an engineering inspection done by someone who is qualified to determine these things.

 

[Phil Mannell]

Ray,

So say I did the appraisal on this property and did not check the well, septic, DNR Creek for compliance. The property sold at full asking price. The people moved in and found out that the well, septic and creek did not meet complience. They were going to need to spend big bucks in order to live in the house on the 60 acres who's back side would be on the line? The realtor? The Appraiser? The seller? Or no one?

Surely the answer to this is "whoever knew about the problem and didnt disclose it".

In Australia we generally use standard "Discalaimer Clauses" to cover this.

Environmental Hazards: Nil known

(XXXXXX- property advisors are not environmental or consulting engineers and make no representation or warranty as to the soundness or otherwise of the land.)

To the best of the Valuer’s knowledge, inquiry and site inspection, there is no evidence of past or present site-specific or nearby contaminating or potentially contaminating activities of nature that on current general information would have any adverse effect on the marketability or value of the property.

The Environment Protection Authority contaminated lands database has not been searched.

Most identified contamination has been included in State Govt databases. We tend to only search the database if we think there may be a problem with the land / part of it, or are aware of a previous use where chemicals may have been involved. They have been developing the system since. A few years after the database was launched, it was realised that a cattle dip on a 1,000 acres should not "taint" the whole property, so they ientify parts of properties as well as whole properties.

Phil M

 

[Stone]

Ray - my partner and I specialize in large rural tracts. The kind of information you are discussing is the kind of stuff I look for in that type of property. It is very important in large tracts to deal with this. However, if I am doing a small tract residential site that has already been improved, I am not going to spend a bunch of time looking for most of what you are describing. If there is a house on the property, and a driveway to get there (and a way over the stream if necessary), then I am not going to check for wetlands, etc. That is beyond the scope, IMO and I don't get paid to do that. When I appraise large tracts I get many times my SF fee and part of that is because of the amount of time and research involved. Plus, those types of assignments are on 30-60 day contracts.

It is important to at least take a representative walk around the property, certainly where there are any improvements, and note the presence of anything that could possibly have a negative impact on value.

If you are appraising large farms that are being turned into farmettes and split up, then much of what you are discussing becomes important. The presence of wetlands on part of the property would have a much more significant impact if the seller is trying to sell off four homesites, as would having reasonable soils for septic, etc. However, it is pretty easy to get the correct permits in Wisconsin for those items and there are very few soils anymore that cannot support some sort of system. Again, I find out and discuss the soils when doing a large tract property, but that is beyond the scope, IMO for a residential improved tract. Unless a red flag of some sort goes up, which is pretty much the case for anything.

Also, if you are looking for wetland info, you can take a quick peek in most county planning and development offices, as they have wetland maps. If you are really concerned about it after looking at them, then contact the DNR.

And, having appraised many properties in the Lower Wisconsin State Riverway, any appraiser doing work in those boundaries has to know what the limitations are, or he/she shouldn't be doing it.

Basically, if you are doing all you describe, I hope you are getting a good fee. It is very thorough, but beyond the scope of a typical appraisal, IMO. I don't go very far beyond asking the owner questions about the well and septic. Not for a typical bank fee.