Rural Appraisal

ownerbuilder-2008May 12, 2010

We built a house last year in the country on three ajoining land parcles. Now we have a contract to sell the house and property. All we need is the property appraisal to come in at the selling price which is lower than we payed but that is just todays market.

Here is the issue, this is a very unique property, 27 total acres that was a park in the 70's with a lake that has a concrete bottom for swimming, a large barn, and the 2700 ft new house. Oh yeah there is an oil well on the property which the new owner will recive royalitys and get free natural gas for the home. There is no comps for anything like this in the area. The county did record the new house but messed that up too recording the house as being built in the 1900's. Then the county property tax office has not revaluated the property for many years and therefore for example my neighbors land that has just an old small barn on it is almost three times more valuable according to the tax records. So my question is how can the bank appraiser be able to give an appraisal. No comps. inaccurate tax records. I contacted the county and they told me I had to get a new boundry survey which I have ordered but the appraiser will be out here this week. Any suggestions?

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Well we just had a big mess of an appraisal and ours is a rural county, but had comps. Our appraiser just didn't use them and wasn't from our area. I hope you're better off with the appraiser the buyers are using.

A good Appraiser will find properties that are as close as possible for comps and then adjust for things such as amenities, acerage, # rooms, baths, and area. In my area an oil-well/gas is not considered a good thing for the appraisal as it would get a deduction in value.

If you get the clown we had (hopefully not that many of him going around) then you'd get too low adjustments and lies, and ommissions and errors throughout and comps from a completely different county.

    Bookmark   May 12, 2010 at 9:36AM
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Tax records are not used in appraisals, so don't worry about that.

The appraiser should make a list of recent local sales and use the houses that are most comparable to yours. That does not mean exactly like yours. They will make adjustments for major differences like square footage, lot size, ponds, outbuildings etc.

The accuracy of the appraisal is going to depend on the appraiser knowing your area well enough to determine which recent sales are most comparable to yours and how much value he assigns to the differences.

    Bookmark   May 12, 2010 at 10:16AM
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Or, there is always the possibility that your property is so unique, an appraisal cannot be completed. In that case, your buyers will not be able to get a mortgage from a lender that sells loans on the secondary market.

If that happens, your buyer would need to find a local bank with it's own staff appraisers who might be to look outside the box.

We had a loan come in with a property that was unable to be appraised. It was a 7000 sq ft custom built home on 150 acres in the middle of nowhere ..we call those types of property "white elephants".

    Bookmark   May 12, 2010 at 12:43PM
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A good appraiser can find comps on anything he's handed IF he's willing to do the work!

I'm probably the Queen of "White Elephant" Houses. The last four we owned and then sold have been very unique for the areas where they were. We got all sorts of excuses from agents why they were going to be hard to sell.
We also got excuses from the appraisal folks how it was going to be hard to find comps.
What it came down to was finding someone who had been in the appraisal business awhile and knew his stuff AND was willing to spend the time NEEDED doing the job.
There's a fair number of folks that do not want a cookie cutter house in a subdivision. They are looking for acreage, distances from others and a house that is as unique as they are.
It's not always a easy quick sell BUT it also doesn't always take as long as the so called pros will tell you either.
Like any other house you have to do your prep work. Since the land and the outbuildings are what makes the property unique they have to be in show stopping condition just like the house if you want to make the sale.
BTW two of our four "White Elephants" sold with in two weeks of going on the market. The other two took around 8 months each.

    Bookmark   May 13, 2010 at 12:38PM
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Thank's for everyones help and opinions. We have the place sold or guess I should say under contract. We have everything except the appraisal done and at the closing office.
Apparenty with the recent tax insentives the appraisers are backed up so we are just waiting on the phone call. It is hard to believe that something as subjective as the an appraisal is the determining factor on selling this property. Even the bank says there is a big diffrence on how diffrent appraisers value a property. It is kinda of a crap shoot if you get a good appraiser or a lazy one that just uses the tax records less ten percent.

    Bookmark   May 13, 2010 at 6:45PM
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The land will be appraised separate from the improvements (house).

    Bookmark   May 15, 2010 at 12:22PM
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"What it came down to was finding someone who had been in the appraisal business awhile and knew his stuff AND was willing to spend the time NEEDED doing the job."

The problem is you can't choose your appraiser any more. You're stuck with whoever the system throws out at you. You (or your mortgager) have no say-so in who the appraiser is/the quality of/or even if they're familiar with the area.

At least this was true at the time of my last appraisal in January.

Cross your fingers you get a good one. Maybe there's an appeal process?

    Bookmark   May 17, 2010 at 12:44AM
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We had our land appraised for a building loan under the new rules. The mortgager's Business Lending office chose the appraiser, but the loan officer was not allowed to be part of the process or to have any contact with him.

According to the lender, a credit union, the appraisal could not be appealed, and a second appraisal could not be ordered under the then brand new federal rules. Given that, I can certainly see how a bad appraisal from an incompetent or lazy appraiser could screw up a sale.

Our appraiser had to go to great lengths to find recent comps for our acreage in the down market.

    Bookmark   May 17, 2010 at 6:46AM
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Just wanted to post a good news follow up. The appraiser did his appraisal. We were very nervous cause the bank would only appraise the land the house sat on not the two adjoining lots. The buyers are having to buy those lots in cash. Anyway the good news, the appraisal came in higher than we expected. It was more than enough to meet the amount the buyers requested.
We are heading to closing Tuesday morning. Can't wait till this is done and we have a check in our hand, that will be real good news!

    Bookmark   June 27, 2010 at 8:09PM
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Sure hope all went well this morning!
Kathy G in MI

    Bookmark   June 29, 2010 at 8:12PM
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