W_A_Watson_II
Well-known member
Appraisals of homes but next to zero value in an out building. I had a very nice Morton building, fully lined, insulated, power bathroom, etc... and I got less than 10% of the cost in an appraisal.
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Appraisal experience
- Thread starter MrSurly
- Start date
myredracer
Well-known member
Man, the real estate market sure is different everywhere!
Here in BC's Vancouver lower mainland area, we had totally stupid crazy real estate prices for about 8-10 years or so. Certain crazy rich asians looking to launder money were flipping houses in the higher priced areas for in the million dollar range, and in some cases it happened repeatedly on the same house in a short period of time. Some houses weren't even occupied and had overgrown lawns & gardens and looked like demo bait. Made zero sense and people were going, WTF??. Eventually, a year or two ago the gov't enacted a "foreign buyer's tax" which put the brakes on that. It became known around the world as the "Vancouver model" for laundering money. (Some launderers were literally walking into casinos with bags of cash and turning it into clean money in front of everyone.) Insane!
As a result, many property owners in the higher priced neighborhoods were cashing out and moving to nearby rural areas and building a nice new house and still having a sizable amount of cash left over. Some were building monster houses on farm land which of course, upset the real farmers trying to eke out a living. 'Course, it only drove up prices in the rural areas. Now they're starting to limit the sizes to 5400 sq. ft or thereabouts on farmland. Don't know if that includes an attached workshop or not. Good thing I built our house before that came in...
When I bought our current rural acreage 16 years ago, if I wanted to add a lot of value, the appraiser recommended building a nice workshop/garage because there's a LOT of vintage/classic car enthusiasts looking for places with nice garages. So I did!
I'm glad around here, building a decent size shop/garage can add a lot of value. I'd be seriously depressed after spending a lot of $$, time and effort if I found that it was all for nothing in the end.
Here in BC's Vancouver lower mainland area, we had totally stupid crazy real estate prices for about 8-10 years or so. Certain crazy rich asians looking to launder money were flipping houses in the higher priced areas for in the million dollar range, and in some cases it happened repeatedly on the same house in a short period of time. Some houses weren't even occupied and had overgrown lawns & gardens and looked like demo bait. Made zero sense and people were going, WTF??. Eventually, a year or two ago the gov't enacted a "foreign buyer's tax" which put the brakes on that. It became known around the world as the "Vancouver model" for laundering money. (Some launderers were literally walking into casinos with bags of cash and turning it into clean money in front of everyone.) Insane!
As a result, many property owners in the higher priced neighborhoods were cashing out and moving to nearby rural areas and building a nice new house and still having a sizable amount of cash left over. Some were building monster houses on farm land which of course, upset the real farmers trying to eke out a living. 'Course, it only drove up prices in the rural areas. Now they're starting to limit the sizes to 5400 sq. ft or thereabouts on farmland. Don't know if that includes an attached workshop or not. Good thing I built our house before that came in...
When I bought our current rural acreage 16 years ago, if I wanted to add a lot of value, the appraiser recommended building a nice workshop/garage because there's a LOT of vintage/classic car enthusiasts looking for places with nice garages. So I did!
I'm glad around here, building a decent size shop/garage can add a lot of value. I'd be seriously depressed after spending a lot of $$, time and effort if I found that it was all for nothing in the end.
swaterbenny
Well-known member
Your talking about selling, very different than a refinance appraisal in my area.
Ben
Ben
finn
Well-known member
Your talking about selling, very different than a refinance appraisal in my area.
Ben
Not anymore.
The appraiser has to show comps now, after the real estate meltdown ten years ago.
No more pie in the sky appraisals.
mike93lx
ALLIANCE MEMBER
Sold my old house this past summer. Realtor added about 20K for the garage. All offers were people interested because of the garage. Around here, it usually works out where it adds about the cost of materials. But like a pool, what it can do is limit buyers.
that doesn't mean it will appraise higher. appraisals are all about comps, so there have to be other properties in the area with similar garages that also benefited during recent sales. the appraiser has some leeway, but not a lot.
I think he was saying that a permit for demo and soil disturbance was 40k.
Yes both ... In my case .. Just putting the permit together was 9k. + Legal ..and the township costs (legal and engineering) that you have to pay for them to do .
HoosierMark
Well-known member
There is a lot of confusion on assessments and appraisals. Assessment values are guided by state law and how taxation works for the state. In Indiana they assess the improvement based upon the replacement cost then subtract out depreciation based upon charts the state has approved and then adjust for other factors and a market factor based upon sales activity. Appraisers mainly use sales comparison analysis for the value conclusion. If it is a new house then it would also include replacement cost analysis and if it is an income property then it would include an income analysis. The taxation value is basically irrelevant to the appraised value. Taxation does not factor in the number of bedrooms for example but it can be a major factor in some markets. In rental property, the income stream is typically the main factor in a value conclusion. For example, basements and excess square feet, typically do not add value to rental property. An out building would if it produced additional income, if not it could be a liability as it raises taxes, insurance and maintenance costs but does not produce income.
Handyandy23
Well-known member
I don't really understand why it would be a minus, please explain that. I mean, I can see that someone may not need the red iron metal building and since they have no need for it they certainly won't pay more because it is there. But I can't understand why they would expect to pay less if it is there. I would think there would be a lot of things someone could do with the building. If nothing else, build some dividers inside the building and charge people to store stuff there.
As mentioned by someone else in an earlier post, an extra building on the property could cause a loss in value if it's an eye sore, or it's a large building on a relatively small lot. If the red iron metal building is taking up half the back yard, people that have no use for it will want to get rid of it so it can be usable yard space again. If you have to pay to have a building removed, that's going to decrease the value.
I'm not saying it would be common to see this, but I can see how it would happen in certain cases.
Falcon67
Well-known member
I just looked mine up because of your thread. Lookup your neighbors house with a detached garage on zillow then click the county auditor link, it should pull up the house on the auditors site, if not you can search it manually.
Accessed values on Zillow, et al, are pulled from county records. County record values are tainted by a number of factors and many times have little relation to the real value of the property. Appraised value can be frozen due to age or other exemption/state law/etc. Appraised or estimated values on Zillow are total BS, *** grab numbers. If not on the market, the "Zestimate" is pretty much country tax appraisal number. Example - we're shown at 146K. The house across the street recently sold for 180K with a bit more floor space and needing a crp load of rework, not near as nice as our place. So are we under value or did they just pay too much? (they paid too much based on a number of factors but are very happy with the purchase and are good neighbors, so whatever) What is for sure is that the "Tax man" is gonna clobber us with that comp.
X234th above - out building will increase tax appraisal value, will not increase appraised value for sale. Same with a pool - most buyers hate them. For insurance, you'd want appraised for replacement value of everything on property.
If we were to sell, we know people in real estate and they would target buyers that need a shop for race, hobby, etc so our layout would be a plus.
LOL from Zillow as it relates to our house:
PRICE REDUCED $20000 from original list price!!! Suburban setting on a tree lined cul-de-sac. (most gone - dead mesquite) Home features lots of tile (different colors, most lousy DIY job), built ins (scarred up required re-finish), a giant utility room (6x12 is giant?), wood burning fireplace (that back drafts) and covered back patio (that's too narrow to sit on).
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Augus7us
Well-known member
Accessed values on Zillow, et al, are pulled from county records.
Lol, did you read what you quoted? I'm saying use zillow to get to the county auditors site, in some counties its easier to look up your property on zillow and click the link to your property on the county auditors site, than it is to go to the auditors site and look your property up.
That said, if you want to get an idea of what your property is worth after making an "improvement" what else can you look at without paying someone to come out and asses your property?
kj_mustang
Well-known member
Appraisals are still very subjective. Even though the appraiser finds comps, they will make adjustments in value on the comps that are their own opinion and some of those can vary wildly. I built my building first and then had to have the property appraised for the new home construction loan. They valued my building at mid Twenty thousand. I laughed at that as it was less than the building shell cost to build.
Handyandy23
Well-known member
Keep in mind though, an appraisal is just based on what the perceived value is to someone else. Nobody cares how much it cost to build if there isn't market demand for what you have.
It's just like cars - you can buy a 77 Mustang II and spend $50k restoring it, and it's still only worth $15k (or whatever the going rate is for those cars). Or you could have a 69 Boss Mustang that's appraised at $100k. Just because you have X-dollars into something, doesn't mean someone else is going to give you X-dollars back for it (or that it will appraise as such).
It's just like cars - you can buy a 77 Mustang II and spend $50k restoring it, and it's still only worth $15k (or whatever the going rate is for those cars). Or you could have a 69 Boss Mustang that's appraised at $100k. Just because you have X-dollars into something, doesn't mean someone else is going to give you X-dollars back for it (or that it will appraise as such).
Keep in mind though, an appraisal is just based on what the perceived value is to someone else. Nobody cares how much it cost to build if there isn't market demand for what you have.
It's just like cars - you can buy a 77 Mustang II and spend $50k restoring it, and it's still only worth $15k (or whatever the going rate is for those cars). Or you could have a 69 Boss Mustang that's appraised at $100k. Just because you have X-dollars into something, doesn't mean someone else is going to give you X-dollars back for it (or that it will appraise as such).
Agreed. But in theory, putting money in to restore is different than cost to build. One thing that bugs me about the whole appraisal is this scenario. If you take the same house plans, use the same contractor, and the same supplier to build a house. But you build it in two different areas, the only difference in price should be the cost of the land itself. But that tends to not be the case.
If I remember correctly, there are three levels of appraisal: Desk appraisal, drive-by, and walk-through.
A desk appraisal is done by looking at comps online. It can be the least accurate and might not consider a workshop at all. A walk-through is the most comprehensive, and would probably add some value with a shop.
Whoever orders the appraisal (the lender in the case of a mortgage) chooses the appraisal type, although an educated customer might be able to suggest a higher-tier appraisal.
A desk appraisal is done by looking at comps online. It can be the least accurate and might not consider a workshop at all. A walk-through is the most comprehensive, and would probably add some value with a shop.
Whoever orders the appraisal (the lender in the case of a mortgage) chooses the appraisal type, although an educated customer might be able to suggest a higher-tier appraisal.
finn
Well-known member
Agreed. But in theory, putting money in to restore is different than cost to build. One thing that bugs me about the whole appraisal is this scenario. If you take the same house plans, use the same contractor, and the same supplier to build a house. But you build it in two different areas, the only difference in price should be the cost of the land itself. But that tends to not be the case.
No.
A bad school district will hurt the value of that “identical” house, so will a bad, ie trashy neighborhood, a lot on a main highway, a lot next to a junkyard, or a strip mall.
The cost of labor and materials is only part of what establishes market value.
HOAs are regularly trashed on this site, but they exist to establish and maintain desirable neighborhood values and protect and enhance resale value.
HoosierMark
Well-known member
Finn, you hit it. It is location, location, location. It also is simply the market dictating what value is. Cost can be identical but if the buying public will pay more for the zip code X then they will for Y, that is what raises the value. In the case of some cars it is color. I mess with TR 6's, the yellow ones do not sell as quick as the british racing green or red ones. Color is the "location " factor for these cars.
I read in a previous post that there are multiple types of appraisals. Since most appraisals are done to evaluate collateral for a lender, the type of appraisal is usually dictated by the risk involved. I did one appraisal where the bank just wanted to know if the property was worth more then $100,000. Since the loan was a first mortgage for $50,000 they did not care what the actual value was. Since it was a commercial building in a highly desirable location, I simply pulled several comparable sales that showed the property value was well in excess of the $100K. Took a couple of pictures to demonstrate I had checked it out and submitted it. The law in Indiana says the bank needs a valuation of property if they take it for collateral. They just needed to comply with the requirement.
I read in a previous post that there are multiple types of appraisals. Since most appraisals are done to evaluate collateral for a lender, the type of appraisal is usually dictated by the risk involved. I did one appraisal where the bank just wanted to know if the property was worth more then $100,000. Since the loan was a first mortgage for $50,000 they did not care what the actual value was. Since it was a commercial building in a highly desirable location, I simply pulled several comparable sales that showed the property value was well in excess of the $100K. Took a couple of pictures to demonstrate I had checked it out and submitted it. The law in Indiana says the bank needs a valuation of property if they take it for collateral. They just needed to comply with the requirement.
No.
A bad school district will hurt the value of that “identical” house, so will a bad, ie trashy neighborhood, a lot on a main highway, a lot next to a junkyard, or a strip mall.
The cost of labor and materials is only part of what establishes market value.
HOAs are regularly trashed on this site, but they exist to establish and maintain desirable neighborhood values and protect and enhance resale value.
LOL, I know. My point was not about how it is, but how it should be. In my mind it is more about facts vs feelings as to how value is actually derived.
Falcon67
Well-known member
Lol, did you read what you quoted? I'm saying use zillow to get to the county auditors site, in some counties its easier to look up your property on zillow and click the link to your property on the county auditors site, than it is to go to the auditors site and look your property up.
That said, if you want to get an idea of what your property is worth after making an "improvement" what else can you look at without paying someone to come out and asses your property?
The county GIS is the way to do it here, link on Zillow just takes you to the search screen. With the GIS you can zoom down on any property and get all the county info.
As far as "what your property is worth after making an "improvement" " the assessor appraiser's here are pretty good about zeroing in on new construction. As soon as we got the walls up, dried in and painted on the shop (back in 2011) there were footprints in the dirt from the assessors. The building showed up on the fall notification of assessed value for the next year.
Magnum440d100
Well-known member
^^ This ^^
There are a few things that will add to the value. But as noted above, a good appraiser is also going to take into account what improvements have been made to the 'comps' houses.
Take for example, my house. I'm the 5th 2-story house on the block. I have the only 2-story garage. But, my house did not appraise as much as two of the larger 2-story houses. The garage made no difference. Now, had it not been there, it would have been a deduction.
All you really care about is the appraisal being enough for a good rate. That is all that really matters.
When you go to sell, that shop is only worth something to the guy that wants it.
This^
I’m on top of a hill with an EXCELLENT view of the area. But my lot is 1/3 acre, and house is ~1200 square feet.
Houses down the hill on a slightly (and I mean negligible) larger lot, no view and about 200 square feet bigger house appraise for more money.
My plan is to build a 2 story home on this lot, with a decent sized shop out back. Value be damned haha.
That being said, my house = $600 a year in taxes. Their home? $3000 a year in taxes. I don’t get california some times.....
I just went through this 2 years ago. My house is 1150 sq.ft.. I had an established, stick built garage that is 300 sq.ft. and a new stick built 900 sq.ft. garage with finished walls, electricity, gas heat and a bathroom. 2 appraisals and both appraisers said they couldn't find any comps. They added about $12,000 to my appraisal. I have a 400 sq.ft. carport that only needs 2 walls to become part of the house, if I closed it in I would have added much more value than the garages. I've always felt that adding the garage is like restoring an old car, you never get out of it what you put in it. You just need to find the right guy or gal that needs the space to get what you want for the place when you go to sell.