Appraisal of a horse property

[NJRider]

Will be listing our property soon. The only concern I have is that appraisals do not value the barns and other outbuildings anywhere near their value. So it was appraised as a regular residential property with the addition of the acreage at x amount per acre and very little for the outbuildings, including an almost new indoor arena. On the positive it appraised at a decent price, but will not close enough to anticipated sales price.

It will need a serious horse person buyer, not a city person “wanting a little land”, not a buyer expecting to finance 100%. Just interested in hearing from experiences from others who have sold horse property. It is zoned residential, is surrounded by development property and 10 minutes from a large city.

[TCA_Arabians]

You’re right NJRider - You will be looking for a buyer that can pay a sufficient down so that they will only be financing the appraisal on the house & land. Crazy, but that is my experience. You can challenge an appraisal and ask for a review. You can also look for an appraiser that knows horse property. I had an appraisal done recently. He did use the value of the barn. Talk with your realtor about this.

After the fiasco of the mortgage meltdown, new rules about appraisers being independent of the financing were put in place. I think that was a sensible rule. You can look at Zillow.com and realtor.com to get a sense of comps for similar properties in your area. And, do find out how far the appraiser looked to value your property. If your property is an ag use island in the midst of residential zoning - the appraiser has to look further.

[js]

When we sold our place it was appraised on what around us sold for. There was no value for our custom barn, fencing , additional barn and equipment. However, our real estate agent said to list it at what we seemed fair (which was over what local sold prices were but way under what the cost was if all the facilities were factored). Our buyers got a heck of a deal!

[Guilherme]

Appraisals are based upon the market value of a property in the relevant market.

Properties, particularly large, open, buildable properties in urban areas, are valued on that as the relevant market. Which means that equine specific facilities will have little or no value.

If the property were more rural or in an area with a very active equine driven market then that would be the relevant market and those facilities would be valued more highly.

They are also based upon the viewpoint of the person asking for the appraisal. If you are a buyer you want a lower number, as a seller a higher number. The tax assessor likes high numbers. The assessor working for a mortgage company wants a real number as the mortgage company makes money making mortgages but also wants the number at the lower end of “real” as they don’t want to get stuck with a big loss in the event of a foreclosure. So, right here, you have four, potential price points, each driven by a different motivation. If you were to average all four you’d likely be close!

Appraisals, at the end of the day, are SWAGs.

G.

[beowulf]

I work in an assessment capacity - so don’t quite agree with G about the tax assessor “wanting a higher number” – most often, the assessment in towns is fair market value…and is based on about ~200 arms-length sales of other “like” properties in the neighborhood or town from the previous year. The factors taken into valuations are: quality and condition of house (and quality of build/construction), acreage/lot size, zoning and quality of neighborhood, age of structure, etc – and is revised every single year.

My state’s DOR has a law that property values released by assessors should fall within a range of ten percent above/below their full cash value…

In the town I work in, our assessments are almost alwayslower than what real estate appraisals appraise the property for – more often than not by at least six figures! Avg home valuation in this town is about $1.2 million.

Don’t forget to talk to your town’s Assessor, and see how the Principal Assessor has the building[s] and property valued. You can request a building card (sometimes called a “field card” or “property record card”) that will have a breakdown also, of your property.

G is right that equestrian-related structures often have little to no value in terms of bolstering property value; generally, anything without living area is going to be valued for much lower than cost. You will never, in my experience, have a valuation that rivals what the cost was for an indoor or other equestrian structure.

It may be worth it to find an equestrian appraiser, as for many appraisers, they are looking for clients interested in demolitions or subdividing bigger lots to make multiple housing entities… so to them, your buildings and structures are effectively worthless.

[foggybok]

@NJRider

Will be listing our property soon. The only concern I have is that appraisals do not value the barns and other outbuildings anywhere near their value. So it was appraised as a regular residential property with the addition of the acreage at x amount per acre and very little for the outbuildings, including an almost new indoor arena. On the positive it appraised at a decent price, but will not close enough to anticipated sales price.

It will need a serious horse person buyer, not a city person “wanting a little land”, not a buyer expecting to finance 100%. Just interested in hearing from experiences from others who have sold horse property. It is zoned residential, is surrounded by development property and 10 minutes from a large city.

When we bought this place, the appraiser did three appraisals. One as a residence, one as a horse barn with boarding income and one as a working farm. He gave credit to each stall for the boarding business. All three were within 3% of each other. If you are working with someone that is used to this kind of property, they should get very close. The tax guy just came out (I complained his value was too high, much higher than sale price) and he came in about the same price as the sale in the end…

I can tell you that the sellers of this place did NOT get the money out of their new barn and indoor. That was pretty much true of every place we looked. Also, limiting your buyers to horse people really cuts down the pool. Many of the nicer barns we looked at were on the market for years here… A lot of the places we looked at were using indoors for storage (and making good money).

I expect that when it comes time to sell this place, we will be in the same boat. Looking for just the right buyer…

Best of luck to you!

[IronwoodFarm]

Chances are you are not going get a buyer who is a horse owner. You will find a buyer who wants to turn your arena and pastures into a dirt bike track or store cars in the barn or indoor. They have want to have a kennel or perhaps some other type of animal. You really aren’t going to get much to the barn, fencing or ring. But I assume you enjoyed the farm while you lived there, so that is where the pay-off came.

You might do better if the appraisal is through Farm Credit or another lender who does not sell its loans to the secondary market. Farm Credit and other lenders specialiizing in non-conforming loans require a heftier down payment than residential mortgage companies.

I would think your tax assessment would be a good indicator of what your property is worth, unless your locality under appraises by a given percentage. I would not bother with getting my own appraisal – waste of money because the lender will want its own appraisal and will not care a whit about yours.

[Guilherme]

@beowulf

I work in an assessment capacity - so don’t quite agree with G about the tax assessor “wanting a higher number” – most often, the assessment in towns is fair market value…and is based on about ~200 arms-length sales of other “like” properties in the neighborhood or town from the previous year. The factors taken into valuations are: quality and condition of house (and quality of build/construction), acreage/lot size, zoning and quality of neighborhood, age of structure, etc – and is revised every single year.

My state’s DOR has a law that property values released by assessors should fall within a range of ten percent above/below their full cash value…

In the town I work in, our assessments are almost alwayslower than what real estate appraisals appraise the property for – more often than not by at least six figures! Avg home valuation in this town is about $1.2 million.

Don’t forget to talk to your town’s Assessor, and see how the Principal Assessor has the building[s] and property valued. You can request a building card (sometimes called a “field card” or “property record card”) that will have a breakdown also, of your property.

G is right that equestrian-related structures often have little to no value in terms of bolstering property value; generally, anything without living area is going to be valued for much lower than cost. You will never, in my experience, have a valuation that rivals what the cost was for an indoor or other equestrian structure.

It may be worth it to find an equestrian appraiser, as for many appraisers, they are looking for clients interested in demolitions or subdividing bigger lots to make multiple housing entities… so to them, your buildings and structures are effectively worthless.

I respect your opinion on valuation setting, but you don’t work in a state without an income tax, I’ll wager! Since that source of revenue is not available here, TN state government lives on the sales tax (9.75% in most places) and the property tax. Our registration fee for a private motor vehicle is $28. MANY counties (and all of the major ones) have “wheel taxes” that allow up to, I think, a $75 additional fee that can be put into the general fund or about anywhere else. We are a very low tax state. We are a low wage state. And a low service state. Most of us are quite satisfied with this. In our most recent gubernatorial campaign this actually was an issue and the most conservative candidate won. So there is major motivation for the Assessor to be very liberal in setting a higher price on property even though they have roughly the same guidance you have. It’s an example of a political “wink and nod” system. I’ll wager you’ve seen them, too.

So, you are right in theory but I’m right in practice.

G.

[stoneymeadow]

Laurie - feel free to call me and I can give you some feedback and suggestions. Think you have my number or email. I do list and sell horse properties – meet with an appraiser this morning for one of my listings under contract. I gave him a whole packet of info including estimates from three barn builders (Morton, Wick and QSI) as to the cost to build the horse facilities today. gives them some perspective. Helps to work with the appraisers and try to make their job easier by providing data that is not part of the public records. I also provide a features sheet with info about the horse facilities (lighting, footing, auto waters, etc). Your agent needs to be prepared to help the appraiser when the time comes. Have had more than one appraiser tell me they appreciate the help. also, your agent needs to advertise your property on websites such as horseproperties.net and horsepropertiesinternational.com and others. There is also a Facebook page for MO Horse Properties. you have a limited buyer pool so need to throw a very wide net and do it often. Good Luck!

[stoneymeadow]

Hi Laurie - feel free to call me and I’d be happy to give you some suggestions. I specialize in horse properties and had an appraisal just this morning on one of my listings. I try to help the appraisers as much as possible by providing a packet of info highlighting what is not available to them in public records. I also get estimates from several barn builders (Morton, Wick, QSI) on what it would cost to build the horse facilities today. Helps to give appraiser some perspective. Also provide a features sheet highlighting upgrades and features - footing, lighting, construction upgrades (insulation, tongue & groove), fencing, etc.) Pretty much every appraiser has welcomed the info and many have said it has been very useful.

Your agent also will need to advertise on sites such as horse properties.net, horsepropertiesinternational.com as you may very well have an out of town buyer. There are also several great Facebook pages such as MO Horse Properties. Your buyer pool is limited so you will have to throw a wide net and keep throwing it.

Good Luck