evildky
Well-known member
So you have a second appraisal?
Post garage/shop appraisal value
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dcg9381
Well-known member
Depends on who you are asking. You may very well be right that the "right" buyer would pay $200k more upon resale.
But here - residential appraisers (mortgage) and county tax appraisers set values per sqft of "garage" structure far under that of finished residential. It's like a pool - it adds value, but generally costs more than what it will appraise for (substantially). Our 40x60 (insulated/HVAC) - appraised for about 25% of what it cost to build, under $100k on the tax rolls...
dcg9381
Well-known member
I totally agree with you from a practical standpoint. We built our shop with outlets for plumbing, it's already got a full kitchen, hot water, it's literally just shy of residential. But here, because it's not a "standard" building type, there are no "comparable sales" to asses it's value, so our mortgage and property tax appraisals show that it's value is fractional of cost to build.
Like you, I'd pay a premium for a new residence with a shop. But you and I are probably not the rest of the real estate market. And I absolutely have seen home sales (including my last) where the shop made it a "done deal" for the buyer.
I'm in a "property tax" state, so the fact that the shop is valued so low, it actually works out for us. If they valued it as residential (or even 50% of residential) it'd push my taxes up so high that I'd have to relocate. I definitely think that barndos are the way to go (next residence) - but they're difficult to finance here due to the appraisal issue... We've got enough equity that I'll likely do the next one "all cash" and hopefully assume all the advantages of a "low appraisal" building.
Like you, I'd pay a premium for a new residence with a shop. But you and I are probably not the rest of the real estate market. And I absolutely have seen home sales (including my last) where the shop made it a "done deal" for the buyer.
I'm in a "property tax" state, so the fact that the shop is valued so low, it actually works out for us. If they valued it as residential (or even 50% of residential) it'd push my taxes up so high that I'd have to relocate. I definitely think that barndos are the way to go (next residence) - but they're difficult to finance here due to the appraisal issue... We've got enough equity that I'll likely do the next one "all cash" and hopefully assume all the advantages of a "low appraisal" building.
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I'm sure it depends on the area.
Lot of people here want a garage that they can fit vehicles, ATVs, boat, etc, etc.
I looked at one place with a 1500 sqft pole barn and a ~1800 sq ft shop, plus a 2 car attached garage on the house on 9 acres.
If it wasn't for the $695k price tag... about double what I could afford, I'd be moving in soon.
I settled for a 4.4 acre property with a ~1200sq ft shop and no house yet, for the upper 200k area. I may have been able to get it cheaper, it'd been on teh market for approaching 2 months, which is unheard of right now. No "normal" person wants to live in a shop I guess hahahahaha. They did throw in a nice washer/dryer, TV, fridge, and an industrial air compressor. Plus offered to pay for a few things I hadn't even asked for.
How are you guys getting piece-meal appraisals? I can only get them to produce a singular figure for the whole property incl buildings. And the bank just goes with that number.
It's only the assessment authority (for me) that splits off land from buildings.
It's only the assessment authority (for me) that splits off land from buildings.
05snopro440
Well-known member
In my area, the bank will only appraise and give you a loan on the principal residence and the most valuable outbuilding. So if you have a detached garage and a shop, the buyer will be ponying up extra out of their pocket to cover the portion the bank won't finance. That can make it a bit more tricky to find buyers with the free cash to cover it.
zmotorsports
ALLIANCE MEMBER
You can disagree all you want but the facts are the facts. I think much of this depends on the area but here where I live detached garages/shops add very little value to the overall appraisal of the property, regardless of type of structure.
My last shop was nearly the same size as the house, not a pole building. It had a full footing, foundation, stick built with siding and asphalt shingles exactly matching the house. Inside it was fully insulated, heated, sheet-rocked and painted and it brought in a whopping $9k more than the house alone.
My current 3000 square foot shop is larger than the footprint of my house, cost me another third the cost of my house to build and the latest appraisal showed it would bring in less than half of what I paid to construct it. Around here appraisals rely heavily on comparables of the area and many do not have detached garages/shops and those that do most are pole buildings and don't match the houses.
If you are building a detached garage/shop because you want to I would say go for it, if you are looking at resale value it is poor investment in our area. It "may" help the house sell quicker but it won't add much value to the property. Wish that was different but it is what it is.
dcg9381
Well-known member
Their (bank appraisal) single figure comes from a calculator that will have individual details. You need to ask for the details on the appraisal, which should break it down by land value, "improvement value" (per structure) etc. Banks here are not allowed to do appraisals, they have to hire professional appraisers. You probably paid for the appraisal and should be allowed access to those documents.
The assessment authority here (county) gives us a flat appraisal amount. To get details from them, you have to protest their appraisal and go through a process that requests their "evidence packet" - which will show the break down.
CombatNinja
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Firehawk just proved everyone's argument. A 1960s brick ranch with a gigantic shop is going to sell for little to nothing more than the 1960s brick ranch down the street from him. Just because a property is unique does not mean it is desirable. By his own admission he is 25 years old and in what most real estate agents would call a 'starter home'. Nobody that is looking for a starter home has the money or inclination to pay $200,000 for a giant garage. They would take that $200K and buy a bigger house in a better school district with a better view, etc. We all love garages, that's why we're here. We just have to accept that they are not worth anything to 999 out of 1000 people. And the 1 person it does matter to takes his marching orders from one of the other 999.
jar944
Well-known member
So you paid 200k over the assessed value of the house then?
Or you paid for the house and got a free garage that you personally value at 200k.
Edit
I see it was option 2, which proves the garage adds no value.
CombatNinja
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That's how I'm reading it as well. Literally did not appraise, he paid 'nothing' for it and now it is magically 'worth' $200K. Um, ok.
dcg9381
Well-known member
Here's some actual data. The first appraisal is from the county, valuing our 40x60x16 at $74,850 - this year, and we have record housing prices.
The second appraisal is from a mortgage lender - a professional real estate appraiser. They evaluated the same 40x60x16 at $20,000.
This shop cost me $90k as an empty shell 4 years ago. I'm sure I have $160k in it now. It's heated/HVAC, insulated, has a full kitchen (I don't ever show that stuff to the appraisers or let them inside it).
These are different appraisal methods. The county uses a "construction class" method that sets value based on side an dollar multiplier. "Light utility" buildings, they assume are a fractional cost of a residential structure.
The home appraiser had no "comparable sale" data to go by, so he had to SWAG a value on the structure.
The net is that if you're building a shop and expect that it is going to contribute substantially to home equity, I'd think again. I got between $0.15 and $0.50 on the dollar cost to build.
I "suspect" that someone would see value in a large shop as part of the whole property package, but that's not guaranteed.
The other side of this is the county appraised my solar system at $19k. It cost me about $9k to install myself. I suspect that it doesn't add $19k to resale.
The second appraisal is from a mortgage lender - a professional real estate appraiser. They evaluated the same 40x60x16 at $20,000.
This shop cost me $90k as an empty shell 4 years ago. I'm sure I have $160k in it now. It's heated/HVAC, insulated, has a full kitchen (I don't ever show that stuff to the appraisers or let them inside it).
These are different appraisal methods. The county uses a "construction class" method that sets value based on side an dollar multiplier. "Light utility" buildings, they assume are a fractional cost of a residential structure.
The home appraiser had no "comparable sale" data to go by, so he had to SWAG a value on the structure.
The net is that if you're building a shop and expect that it is going to contribute substantially to home equity, I'd think again. I got between $0.15 and $0.50 on the dollar cost to build.
I "suspect" that someone would see value in a large shop as part of the whole property package, but that's not guaranteed.
The other side of this is the county appraised my solar system at $19k. It cost me about $9k to install myself. I suspect that it doesn't add $19k to resale.
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CombatNinja
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Between the two, I'd bet on the real estate pro over the entity that gets to collect taxes on it. $20K for a shop you have $160K in is about the return I would expect.
05snopro440
Well-known member
I'm curious how your 1,200 sq-ft garage (30x40) has a magical extra 700 square feet. That's interesting math.
CombatNinja
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If it is the garage in his avatar, it has a second story. Looks like a great garage.
Interesting. Opposite here. Bank appraisal is a flat single value. Assessment authority (province) splits up land from buildings - for 2 figures total.
05snopro440
Well-known member
Makes sense why he would think garages add so much value, that's not the typical garage.
jar944
Well-known member
And yet from his own post it was worth nothing additional in the homes sale price.
jar944
Well-known member
Same here
finn
Well-known member
The package we got with our Tucson house upon closing contained a detailed multi page appraisal showing land, improvements, and three local comps.
kj_mustang
Well-known member
Residential Real Estate Appraisers are giving an opinion of value of the property. You will get a different value from practically every different one you use based on the comps used and that appraiser's opinion of the property. My last mortgage refinance I had to pay for two appraisals because the first one was done by an idiot. She spent 15 minutes total at my property going through the house and pole barn and then valued it at least $60,000 under what I felt was market value. Second appraiser spent an hour+ on the property and valued it over $120,000 more than the first appraisal which I though was over priced.