Advice needed for determining value of the property

[Bluey]

Appraisers go thru years of education and practice to become and stay certified.
While there is still some room for subjective differences in appraisals, they take their ethics very seriously.

You could ask a couple banks who do they use.
Especially Land Bank type banks will have appraisers that are doing that every day and will have comparables and the knowledge to look at everything to come with a fair price.
Those serious appraisals are not cheap.
Better agree up front who will pay for that.
Sounds like what you have there is an estimate, not a solid appraisal.
Since that estimate seems not quite right to you, maybe consider getting a real, complete appraisal.

Seems like a solid appraisal, the kind banks use for mortgages, would suit your situation best as a starting price point to discuss with the seller.

[Palm_Beach]

Depending on where you are, good appraisals may be hard to get because the appraiser needs to submit comps, and with small to medium farms, good comps are hard to come by. When we refinanced our current place, the appraiser used a comp that had a lean-to on the side of a dinky garage, and called the lean-to a “barn.” I wouldn’t house my chickens in that thing. But if you are in a rural areas, you may have better comps.

Even if the appraisal comes back low, the buyer can still pay a higher price as long as more cash is put up. The banks lend according to the appraisal.

[clanter]

these threads are like an Agatha Christie murder mystery, this one is similar to Death on the Nile

[beowulf]

@trubandloki

This made me giggle because the town I live in did exactly what the OP is saying the owner is doing to figure the value. We tried to fight the assessment with several estimates (we paid to have done). But no. In their opinion we paid X for the land, Y for the house and Z for the barn so the property was minimally worth X + Y + Z.
That is not what the market research said the place was worth, but the assessor did not care.

What! I swear :lol:

That’s bad, though…

Depending on where you are, I am told that the percentage required to be within for fair market value can vary. Here, Assessed Values of homes must not be more than 5% of what the Fair Market Value is.

Most state have this law, but the percentage may vary. I am told that out west it is much higher (40%).

Assessors are assessing for tax purposes, where realtors/appraisers are assessing for selling. However, in my experience Assessors have a much higher degree of education in the Assessment field, and also have much more exhaustive tools at their disposals (very thorough cost manuals, as well as cost programs/software) so usually have a much more researched and in depth breakdown of cost and value.

Of course, not all Assessors are equal. Some realtors and appraisers are brilliant. Some are not. So it goes for everywhere around the world.

[cutter99]

We learned the hard way that the right appraiser means everything. When we purchased the farm we are currently on, the bank we were dealing with sent an appraiser out of the nearest large city. This appraiser had no agricultural experience, and pulled comps that were not truly comps. The appraisal came back over $100K lower than it should have 3 days before settlement. Our realtor was able to find much better comps closer to our property and more recent than what the appraiser found. The appraiser valued our land much lower than even the tax accessor, when it should have been valued much higher as back by comps.

Get more ore than one appraisal. Find an appraiser who knows both agriculture and horse farms.

[Simkie]

@beowulf

in my experience, the ones closest to the Assessor’s published value is often the most correct (fair market value).

When we were house hunting, I actually maintained a spreadsheet of sold properties that were similar to what we were looking for with asking price, sold price, and town appraisal (not assessment; around here at least assessment is a % of appraised value.) There was a relationship of sold price to town appraisal, but it was very rarely close. Sold price was nearly always significantly over. It was a useful comparison for evaluating asking price of properties on the market, especially since the property cards are so easy to access online.

I wish I could find the sheet, but I must have trashed it once we bought. I don’t think I’ve lived anywhere that the town appraised value matched closely to the actual selling price for most properties. It’s interesting that they align in your area!

But for the OP–pulling this sort of data and looking at how similar properties in your area have sold versus their town appraised value can be an interesting way to help evaluate asking price of on the market properties.

[clanter]

@cutter99

We learned the hard way that the right appraiser means everything. When we purchased the farm we are currently on, the bank we were dealing with sent an appraiser out of the nearest large city. This appraiser had no agricultural experience, and pulled comps that were not truly comps. The appraisal came back over $100K lower than it should have 3 days before settlement. Our realtor was able to find much better comps closer to our property and more recent than what the appraiser found. The appraiser valued our land much lower than even the tax accessor, when it should have been valued much higher as back by comps.

Get more ore than one appraisal. Find an appraiser who knows both agriculture and horse farms.

in OP’s case they need that city based appraiser since the appraisal is what they will base their offer

but an appraiser’s appraisal is just an option (supposedly backup with facts)

I prefer Simkie’s method for determining just what I would be willing to pay for a property.

[moving_to_dc]

You might get a lower price from a “non-horse” appraiser…

Our current house was listed for X amount. We offered $40k less than listing, and our offer was accepted. The appraiser turned in a value of $40k LESS than our offer. Good for us, bad for seller…

[TheJenners]

@moving to dc

You might get a lower price from a “non-horse” appraiser…

Our current house was listed for X amount. We offered $40k less than listing, and our offer was accepted. The appraiser turned in a value of $40k LESS than our offer. Good for us, bad for seller…

Oh that sucks! But it’s always why you should get one! OP, just getting one now means you either have ammo for a better price, or the seller gets her hair in a snit and won’t sell, but at least you’ll know where you are.

[Daventry]

Glad you were able to find what you needed. For others that are not aware, this type of appraisal (for real estate) requires a certified real estate appraiser, NOT an equine appraiser. I get calls all the time about this so thought it would be a good PSA to add to the topic.

It is important to note that an equine appraiser cannot value real estate, land or equine businesses, only personal property (horses, saddles, tack, etc.). If you are in need of an appraisal for agricultural land or an equestrian facility, it is important to hire a certified real estate appraiser who is licensed to appraise agricultural land and/or commercial equestrian properties. Real estate appraisers are required to be licensed directly with their State real estate organization. Of course, if you also need someone to put a value on an equine business operation, you want to look for a real estate appraiser who also specializes in equine facilities.

[happilyretired]

Value is what someone would be willing to pay for the property – not what the seller has invested or thinks it is worth. Even an appraiser with knowledge of horse farms is going to base much of their appraisal on “comps” … or what other properties in the area have sold for fairly recently. They will take those properties and make adjustments to what they sold for in comparison to the property being appraised. As others have noted equestrian improvements generally aren’t valued at what was invested in them unless it is an area where equestrian facilities are in high demand with a fairly active market. They are considered “special purpose” improvements that don’t have commensurate value for the “average” buyer. Just like if someone invested money to build facilities for some other specific hobby… they shouldn’t expect others to place the same value on it that they do. That being said you know the property and you value the improvements … and the seller knows that … so she may maintain a higher asking price and wait to see.

[Jeepgirl311]

I am a Realtor and I could write a book about the inaccuracy of Zestimates (and all other online valuation tools). Zillow themselves admit they are not accurate, and I would never use that number to value a regular home, much less a niche property like a horse farm. So go ahead and throw whatever that number was out, it has no bearing on your value.

You need two things here: an experienced Realtor who specializes in horse property, and an appraiser who does the same. Have them both independently come up with a value and that should give you a fairly accurate range to start negotiations with. The key here is to have a Realtor who really knows and understands horse property and has lots of local experience. I am a residential Realtor with over a decade of experience and hundreds of homes sold and would not feel comfortable valuing horse property in my area. It is just a totally different market and I don’t have the experience needed.

You also need to keep in mind that if you are planning to finance the purchase, it will need to appraise (using the lender’s appraiser, who is different from the independent appraiser you will hire to help you come up with an initial value). I would try to find a lender who specializes in farm loans so that hopefully their appraisers will know what they are doing. Also keep in mind that a lot of the items that are likely valuable to you (like stall mats, jumps, buckets, tractor, round pen, etc) are not considered when an appraiser comes up with a value since they are personal property. You will likely need to pay for those separately outside of the real estate contract.

Good luck!

[clanter]

@Jeepgirl311

. Also keep in mind that a lot of the items that are likely valuable to you (like stall mats, jumps, buckets, tractor, round pen, etc) are not considered when an appraiser comes up with a value since they are personal property. You will likely need to pay for those separately outside of the real estate contract.

Good luck!

read this on going thread of “seller took the gate and fencing” as to just how screwed up some people are …then they came back to take the front door of the house

https://www.chronofhorse.com/forum/forum/discussion-forums/around-the-farm/10419265-seller-took-gates-fencing

[Jeepgirl311]

@clanter

read this on going thread of “seller took the gate and fencing” as to just how screwed up some people are …then they came back to take the front door of the house

https://www.chronofhorse.com/forum/forum/discussion-forums/around-the-farm/10419265-seller-took-gates-fencing

Yep I saw that. Everyone needs to be very careful and clear with what transfers with property in a sale. In my state we have a disclosure that addresses that. But even if there are non-fixtures transferring with the property, and appraiser will not consider those items when coming up with a value.

[clanter]

@Jeepgirl311

Yep I saw that. Everyone needs to be very careful and clear with what transfers with property in a sale. In my state we have a disclosure that addresses that. But even if there are non-fixtures transferring with the property, and appraiser will not consider those items when coming up with a value.

in OP’s case, the property owner and her real estate agent have already conjured what they know is the fair market value… the question becomes can OP devise a plan that would counter this predetermined value without insulting/making the owner.mad

I lean toward Hell Freezing first as the appraised value most likely is going to shock the owner into believing the mob has moved in trying to steal her property

[mdp9]

Appraiser coming Friday… will keep you all posted!

[Alpha_Mare]

just a comment related to the upgrades, fencing, etc, there are known depreciation schedules for types of fencing, equipment and buildings that you can use to compare with the inspectors/appraisors. e.g. some fencing is 5 year, some 10 year, some 20 year, and how many years ‘in’ are you (since installation).

Second, an inspector can normally give you repair estimates. E.g. it has a roof but it’s 40 years old, in the next 5 years likely to need replacement, how much does that cost. For things that may be functional now but clearly will need replacement/repair in future (electric installed many years ago comes to mind) get the replacement estimate and deduct from assessed value.

Because the repairs are cash, not financed.

[Justice_for_Horses]

@clanter

just look at some of the properties listed here on CoTH… you could not build the place for what they ask and they still have trouble finding a buyer

How do you know whether they are having trouble finding a buyer? Which properties are you talking about? If the property is in an area non-affluent or where there is not a lot of equestrian activity, then of course a horse property will be difficult to sell. In areas that are heavily equestrian populated, horse properties sell.

No matter what the assessed or appraised value is, it comes down to whether someone really wants that particular property and is willing to pay top dollar for it. Whether barns, indoors, fencing and the like depreciate may be true. Even so, if someone wants a horse property to build that facility and a house is going to cost far more and really be a pain in the arse. Desireable communities are desirable because they have ordinances and township regulations. A buyer can’t just buy a piece of land and start building. This all takes time and money and comes with a lot of aggravation.

In short, I do not have any idea how much OP’s property is worth, but I think she should decide what it is worth to her. The exception would be if she plans to sell it later.

[clanter]

@Justice~for~Horses

How do you know whether they are having trouble finding a buyer?

the amount of time the ad has been posted

this one just amazes me… now at $875,000 but will look at all offers. We are Not in a high priced area but a one acre lot would be $400,000 and that’s bare ground…this is 32 fenced acres with improves …its been listed for a while

New Price!! Seller will look at all offers. Autumn View Farm is a one of a kind 32 Acre Horse Farm. Expertly designed & sited to maximize the property function & natural beauty. MASSIVE 80’x200’ indoor sand arena designed w/nearly 200’ of open windows. Barn features 10 custom built 12x12 stalls, wash stall w/hot & cold water, heated tack, feed & viewing room, giant storage room. Over-sized parking garage. Spiral staircase leads to 2nd floor viewing balcony & hayloft. Outside features a 125’x165’ outdoor sand arena w/drainage, multiple pastures & white maintenance free vinyl fencing. To further compliment the property the 2700+ SF open floor plan home features 4 beds 2.5 baths in ground pool & spa. Extra income from currently 8 boarded horses & would like to stay & continue to board.

https://www.c21turnerbrokers.com/-/l…Wales-NY-14139

[cutter99]

@clanter

the amount of time the ad has been posted

this one just amazes me… now at $875,000 but will look at all offers. We are Not in a high priced area but a one acre lot would be $400,000 and that’s bare ground…this is 32 fenced acres with improves …its been listed for a while

https://www.c21turnerbrokers.com/-/l…Wales-NY-14139

Yes, but this property is near Buffalo, with lake effect snow, plus the taxes are over $12K a year. With only 10 stalls, you are limited to the amount of horses you can board, plus on only 32 acres you will be feeding hay year round. Might be a bargain if you have 10 horses of your own and enjoy snow!