The best thing is to ask a local appraiser or real estate agent.
Here, yes, it would add value. It’s a relative “yes” though. Any structures on the property will add value. Structures are assessed by their condition in general terms. So if your house is a dump and needs a lot of work, the assessor will rate it low and the assessed value will be reflected accordingly. If the barn is a hazard and a teardown, it could negatively impact your property value. On the other hand, if your house is in excellent condition and then you add $70,000 curtains to replace the serviceable window coverings which were there before, and I use this example because I know someone who did this, then no, it won’t add to the appraisal which hasn’t changed. The house was in excellent condition before the curtains and is still in excellent condition.
Similarly, if your barn were an empty shell before and you upgraded it so that it would be excellent and useable, then it would add a little to the value of your whole property. How much? I have no clue. I would guess that things like bathrooms, which will show up on the tax rolls, will add more.
The issue that jumps out at me is that of ratio of the value of structures to land. If your ratio is near the borderline of qualifying for many loan products, then any structural additions or improvements which can put you over the top into a favorable ratio will increase your pool of prospective buyers (because there will be so many more loan products available) and could seriously increase your property value. (However, some loan products will be based on just the house and two of your acres and will give a zero value to the rest of your land rather than outright refuse to finance the property.)
The value of land/value of lot ratio and its importance depends on many factors, including your area, the types of financing available in your state, how much land you have (a real farm or a small gentleman’s farm), the market in your area, and the zoning.
For what it’s worth, here is a link which explains how property is assessed for tax purposes by the state of Iowa. I don’t know if a market appraisal would be done the same way:
http://www.iowa.gov/tax/educate/78573.html
How does an assessor value property?
Residential, commercial and industrial real estate is assessed at 100% of market value.
The assessor must determine the fair market value of the property. To do this, the assessor generally uses three approaches.
Market Approach: Find properties sold recently that are comparable to yours. Analyze sales of similar properties that were recently sold. Determine the most probable sales price of the property being appraised.
Cost Approach: Estimate how much money at current labor and material prices it would take to replace the property with one similar to it. This is useful when no sales of comparable properties exist.
Income Approach: If the property produces income, such as with an apartment or office building, estimate its ability to produce income.
[B]
Agricultural real estate is assessed at 100% of productivity and net earning capacity value.
The assessor considers the productivity and net earning capacity of the property. Agricultural income as reflected by production, prices, expenses, and various local conditions is taken into account.
[/B]
I highlighted the Ag part assuming your farm is agricultural, but you can see the difference if it is residential. If it is agricultural, and reading the statement above, I’m wondering if your earning capacity would be increased by adding stalls? Maybe the square footage is the only issue taken into account as to how many horses could be in the barn?
If your property is residential, then part of the appraisal is based on replacement cost. In that case, you would definitely be adding to the value with your stalls and improvements.
Who knew this could be so complex?
Interesting link on lot-to-land ratios and investment:
http://www.realestateconsulting.com/blog/don-walker/lot-price-can-get-investors-trouble
