Working Farm Definition

[hastalavista]

Originally posted by Mike White@Sep 13 2005, 02:53 PM
Does your county require any type of business permit for an operating business? If so, the county can help you out. Having livestock, barns, or other such ag type buildings does not make the property a working farm. Lots of people own horses, cows, chickens etc., but that does not make their property a working farm. I have a lima bean plant in a pot on my front porch that my son is growing for a science project, but that does not make me a farmer.

I don't know if this will sound like it makes sense, but I think Mike's approach is good if you are trying to prove that it is a working farm. However, I'm not sure it proves it isn't.
The fact that an activity is non-permited doesn't change the fact that the activity exists.

 

[Ted Martin]

No working equipment (although there is probably a acre of scrap iron).

No permits needed.

Nobody is offering to pay me for this service. If this is a concern to them, then they ought to be able to provide a definition.

I live on 160 acres three miles south of the subject. I'm not sure I would call our place a working farm. I rent my "big yard" to my neighbor for his cows three months a year, the rest of the year I just let my oversized lawn grow.

Forgot to mention that the property is zoned RR - Rural residential not AG agriculture. The 27 acre site size is the minimum for this site, no further splits will be approved per the zoning department. Not that zoning classification would prohibit "farming", but it's another indication that this isn't a "working farm". All of this was in the appraisal.

My approach after three days of dinking around with them was just to make up my own definition and certified that they certified that it didn't meet my definition. See I did get something out of my college literature class and the required reading list that included Catch-22.

 

[Randy Beigh]

Ted,

My way of handling odd requests like this. I never want to take liability.

I would just spit back what they told you. "The lender says this is not a working farm" and let it go. Put the problem back in the lenders ballcourt, while at the same time giving them what they want. Everybody wins.

By the way, I have never heard the term "working farm" before. I think of this as income property. If the land is producing an income, their tax records will show it.

 

[Rich Heyn]

This looks like a H&BU issue. Fannie's charter does not allow them to puchase or securitize loans involving properties that are not residential in nature. In other words, no "agricutural" type properties. Try clarifying this with the UW and stating in the site comments section of your report that the property is not an "agricultural" type property but "residential" in nature, even though it involves acreage. Assuming this is the case, of course. Good luck. Sounds like a classic example of a DSUW coupled with a DSLO.

 

[Kate]

Farmer Mac needs to get in gear. I took a Farmer Mac class on part time farms and rural residential properties. They are moving into my area but slowly. They are needed as I see it.

 

[Caterina Platt]

:rofl: I had to take a double on Rich's acronyms. I get it now. :rofl:

WF has recently been firing over the request to 'state that the workshop is non-income producing'.

In my stubborn little mind, ain't none of their business (or mine for that matter) if Grandpa is making little wood plant baskets on a small scale to sell to his wife's friends at the office, or similar things that retired gentlemen often do. I will not state unequivically that it is 'not income producing'.

I write a simple paragraph to the effect of: no retail signage, showrooms, parking area, or other commercial activity was noted on the site. The workshop appears to be utilized for hobby purposes.

In the case of the 'Working farm' issue, I've often had to state something like,

The subject site size is that of a typical 'gentleman farm' or 'hobby farm' in this market area. Typical self sustaining agricultural properties in this location require many components that were not noted on the subject site. The greatest of these components missing is land area that would be required to support such an operation. Further, no commercial activity was noted during the site inspection.

I may not use their specific wording, but I will tell them it's not a commercial/residential mixed use property masquerading as residential.

It's basically reiterating the items we already addressed in the report, and it gripes me, but I have bigger battles.

Now, in your case Ted, where you've already given them specific commentary explaining the site size minimums and other details.....I've been known to copy and paste.

As stated previously on the first page of the URAR: Blah blah blah

I understand referencing the lender back to the IRS Schedule F forms, as it would be the most logical way to determine if there is farm income, however.....when you requested to see that, I think you went beyond the scope of the appraiser. Not my job to verify the source of their income. Not my business to see their income tax information. I tell them what I see in reference to the real estate, let them sort out the source of the income.

 

[Couch Potato]

Originally posted by Caterina Platt@Sep 13 2005, 10:04 PM
Now, in your case Ted, where you've already given them specific commentary explaining the site size minimums and other details.....I've been known to copy and paste.

As stated previously on the first page of the URAR: Blah blah blah

I use the copy/paste from the report too. It's the nicest way I know to say "read the report DS" :rofl:

 

[Phil McDonald]

This is the standard comment I use when appraising a residential property on acreage.

ADDITIONAL COMMENTS ON SUBJECT'S RESIDENTIAL NATURE:
FNMA Guidelines state: "Properties with minimal outbuildings - such as a small barn or stable - that are of relatively insignificant value in relation to the total appraised value of the subject property are acceptable if they are typical of other residential properties in the subject area. For example, a property that has a small barn or stable is acceptable if the appraiser demonstrates through the use of comparable saleswith similar improvements that the improvements are typical of properties for which an active, viable residential market exists...
The subject property is residential in nature with no commercial farming activity observed at the time of imspection.

 

[Otis Key]

Sounds like a classic example of a DSUW coupled with a DSLO.

That is probably the best explaination to the whole problem!

 

[Ted Martin]

They seem to have gone away, anyway they haven't called yet today.

Commercial farming activity - does Fannie or Freddie have definition?

Seems we're back to verifying a financial condition for which we don't have data, expertise or responsiblity. Certifying that a property is or isn't a "working farms" or that "commercial farming activity" is or is not taking place on the site is like being ask to certify that the paint either does or doesn't contain lead. With respect to lead based paint, I don't have any problem with stating that the subject was built before 1978. But I can't certify for certain that the paint is or isn't lead free. What the lender or Fannie is asking for can't be done without a definition. At least with lead paint we've got a date.

I did a house last month, in town, zoned single family on which the owner had a large garden and was selling corn and tomatoes. That homeowners intown lot was generating a higher rate of return and more cash flow from a commercial farming activity than the 27 acre property that was the original focus of this thread. Was I wrong not to disclose the existence of that garden and the income stream in my appraisal? From my perspective if a property is zoned residential, conforming and at it's highest and best use as a residential site then that should be the end of it regardless of the sites size.