Do horse stalls increase property value?

[Jaideux]

I’m not in the market whatsoever to buy anything. Maybe (hopefully) one day. I say that to point out I’m not speaking from any point of education about the real estate market. That said, I would fully have expected to pay more for pre-existing horsey facilities given that I am/would be looking for a horsey property. Toss in the part where the barn is very old but completely re-done? I would understand if you added another zero when my history-loving eyes lit up upon seeing it

As an equestrian, having pre-existing stalls/fences is kind of actually an important thing for me. Though I love the idea of going through the Lucas Equine catalog and picking out all custom stuff… goodness knows that if I have to complete any more steps, I probably wouldn’t be bringing the horses home for a year. Or more. So a turn-key horsey set up in an historic structure would definitely be worth it for me. But I’m a very specific kind of equestrian-property purchaser, maybe. You know, the hypothetical type.

I probably wouldn’t go purchasing a property that had a swimming pool if I don’t want a swimming pool. I know I could just take it down but… for me, personally, I better love A LOT of things about that property to make it worth my while to convert the pool into a patio. However, given that the pool is present on the property I want to buy, even if I don’t want to use it, I would still expect to pay more. It’s not the seller’s problem I don’t want to use the feature.

Just like… if I buy a top A/O horse but only anticipate jumping 2’ courses at local shows, I shouldn’t expect them to sell it to me for any less. It’s not their problem I don’t plan on using the horse to the fullest of it’s talent. Or if I take a lesson with George Morris and I’m too stupid/unathletic/untalented to really get the full value of his knowledge, I wouldn’t expect him to charge any less for the lesson… even if we never get past a halt in the middle of the ring right after I mounted.

And, I’ll throw it out there, I understand why people value and explore what kind of money they can anticipate recouping on their investments but… It’s kind of like buying and owning horses. MOST of us won’t be able to sell a horse for much more than we bought it for, if anything. Lord knows we especially won’t after we take into account paying for board/lessons/etc. But I think most of us justify that because it’s really the experience we’re going for, not the flip for profit. Unless you are a trainer that does that… but that also influences what kind of horse you buy and how you use it. Just like it influences they type of property and improvements house-flippers also invest in.

I guess what I’m saying is that, if you enjoy the crap out of your facility and you’re okay with paying the price you paid, then I would stop even thinking about resale value stuff. Obviously maybe don’t do things that will make it very hard to sell the property to anyone at all, but it’s your haven. Make it so YOU enjoy it (without going broke).

[DHCarrotfeeder]

As far as appraisals (which aren’t important to you), it will help immensely if there are comparables that recently sold in your geographic area that have similar setups. In today’s slower market it can be hard just to find a property of similar home and acreage and a barn. Whether that acreage is fenced, with indoor or outdoor arena, is secondary and not likely to match up on your comps. How many stalls, condition of pastures, pasture run-ins and waterers, size/quality of the stalls, etc would probably never be considered. A well equipped, well maintained property with outbuildings and arenas will always lose out if it’s above average in an area.

Appraisals are a pet peeve of mine. They are a grey, approximate valuation method and there is nothing wrong with that. I am displeased with how bankers and lawyers use them as a sharp-edged tool and they are the ones who don’t have to be flexible. Buyers and sellers are on the receiving side of that and they collectively pay for the imperfections in appraisals. And of course if you’re rooting for a stronger real estate market then this is one of the things holding back progress.

[rhymeswithfizz]

Every appraiser I have actually met in person has been a complete idiot.

The last one who appraised our property compared the second residence that we built on our property (a fully equipped $250k HOUSE) as “equivalent” to a nearby sale that had a “bonus room” over the garage. Her appraisal was so awful and full of glaring mistakes (she miscounted the number of garages, measured wrong, missed an entire basement, and forgot the barn) that the bank rejected our refinance. Since I was pregnant at the time, about to get laid off (thus we would not be able to re-apply and would lose thousands of dollars), and chock full of angry hormones, I called to let her know I was going to take her to court, sue the pants off of her and put her out of business so she couldn’t do that to anyone else ever again. Ya know, just a courtesy call to tell her she has f-ed with the wrong girl. Fortunately she hustled her butt right back out and fixed the mistakes, and everything worked out.

But it pisses me off to no end that morons like that can actually influence financial transactions of this scale. There needs to be more training and stiffer requirements for people in this role.

To stay on topic, no, the stalls in the barn were not credited with any value.

[Faceman]

[QUOTE=DHCarrotfeeder;7275584]

Appraisals are a pet peeve of mine. They are a grey, approximate valuation method and there is nothing wrong with that. I am displeased with how bankers and lawyers use them as a sharp-edged tool and they are the ones who don’t have to be flexible. Buyers and sellers are on the receiving side of that and they collectively pay for the imperfections in appraisals. And of course if you’re rooting for a stronger real estate market then this is one of the things holding back progress.[/QUOTE]

Now, now - let’s not get on the big bad bankers kick. On residential loans, bankers have NO CHOICE but to adhere strictly to the appraisal. Thank your federal government for that. There is some discretion on “in-house” loans, but banks rarely make those for a variety of reasons unless there are some sort of justifying circumstances.

On the other side of the coin, banks have great latitude on commercial loans, although the amount of a commercial loan that is under secured must be covered with a reserve entry…

[CVPeg]

Just thought of something else. A farm close to my sister, just west of me, had been for sale for-e-ver. In an area of H/J, and some western, the farm was a breeding farm for Arabs, with very small, short height stalls. And this was back when OTTBs were more in fashion, and WBs just coming in.

The barn was really tricked out with very nice amenities, so just tearing down stalls, putting in dividers, etc wouldn’t have worked. My sister had said “what do you think?” at some point many years ago. Told her it wouldn’t suit most horse people - just a specialized buyer. It seemed very reasonably priced - but stood there for sale for many, many years.

Another issue with the farm - it had lovely views - because it was built on several steep levels. UGH. Pastures at the bottom, barn/out buildings in the middle, house at the top behind a big sweeping driveway to accommodate a big, big garage. I can just imagine the mornings and evenings in the winters up here - unless you had an ATV… :rolleyes: Anytime finishing chores, having to walk up a steep, slippery hill to the house, passing the driveway ice rink en route. Let alone if you had horses that didn’t willingly come to the gate.

But if you’re putting stalls in a barn, it’s a really good idea to build as large as you can, definitely with a good height to the ceiling, and at least with the flexibility for needing a bigger stall(s) in the future - even if you just like a smaller breed.

[casper324]

Considering I’ve been told that 4 miles of fence, 3/4 of a mile of pavement, an indoor, 2 barns and equipment sheds have no real value, I doubt stalls do. These things might help sell but don’t add value according to a realtor.

[vxf111]

Echo that if you’re putting something in, make it multi-use/attractive to all disciplines. We looked at a house with a barn that had beams placed so the stalls could be, at maximum 9x9. And the run-in shed was about 9 foot high. I guess they had minis or goats or something. I am sure it worked great for that. It was basically useless for horses.

[sbwinde]

We purchased our home in Texas which already had 2 acres fenced off, a 3 stall barn and an arena. Originally the owner was asking 100k more for the property in hopes of recouping her expenses, but she ended up continuing to drop the price because the majority of people could have cared less about the barn, arena and fencing, some potential buyers even asked her to have it torn down. So in some instances, it might decrease the value if that isn’t what the buyer wants. We were fortunate to find the perfect set up for us and our girls.

www.sahorsesupply.com

[Guilherme]

The value of anything is what a seller will take from a buyer.

An “appraisal” is an attempt to determine a current “fair market value” for something.

There are two types of appraisals. The first is the WAG (Wild Ass Guess). Stuff “for sale by owner” or other amatuer seller is generaly valued this way.

The other type is the SWAG (Scientific Wild Ass Guess). Here there is some rational basis for a value. The NADA book on used car values is a good example.

Normal personal property is not all that difficult to value. Real estate is different. By law each piece is unique. It is fixed in location. It has multiple variables. Two different appraisers, both acting in good faith and using the same methods, can generate two very different numbers. If the appraiser is honest they will give a range of value, not a hard number.

There is also a massive difference beween a tract house or a “McMansion” and rural/bare land property. In those latter properties the range can be quite large depending on multiple factors (including the buyer’s intended use).

From the point of view of the lender, a conservative value is generally best.* The appraiser is selected by the lender (but paid for by the buyer; this creates some interesting questions of loyalty and duty). An honest, professional appraisal protcts the buyer from overspending and the lender from overlending. Think of it as a form of “adult supervision.”

G.

*But not necessarily. If the “lender” is, in fact, a mere agent then they make money on fees. This is what drove the S&L crisis in Texas in the 1980s and the real estate “bubble” of 2003-08.

[DHCarrotfeeder]

[QUOTE=Guilherme;7283066]
The value of anything is what a seller will take from a buyer.[/QUOTE]

Indeed. If a property is in higher demand that last year, it should allow a buyer and seller to agree on a bigger price than before. An appraisal based on last year’s sale prices frequently prevents that. As many of us here are property owners or prospective buyers, and our properties are typically difficult to appraise, this should mean a lot to us. While it’s well-known that spending money on improvements is not a dollar-for-dollar increase in equity, it’s a problem if it’s worth absolutely zero in an appraisal.

[QUOTE=Guilherme;7283066]
From the point of view of the lender, a conservative value is generally best.* The appraiser is selected by the lender (but paid for by the buyer; this creates some interesting questions of loyalty and duty). An honest, professional appraisal protcts the buyer from overspending and the lender from overlending. Think of it as a form of “adult supervision.”[/QUOTE]

I’m not saying appraisals are bad. The wild lending and overvaluation was horrid, and I’m happy it’s stopped. But our current policy with appraisals is still partly broken, and I have yet to hear an argument to say it’s not holding back our recovery.

There is little incentive for an appraisal to be done well in the current system. I’ve been burned by poor appraisals more than once, and there is no protection as a consumer except to buy in cash. (Which obviously, very few salary earners will ever do). Once a bad appraisal comes up in a sale, the damage is done and little can be done as a seller to ensure you get a fair estimate. (As a buyer, a bad appraisal is a stroke of luck for you at the sellers expense)

The other problem is the current appraisal system it ignores inflation and market movement, because it’s an average of the raw value “recent” transactions. If your property is moderately unique or the market is slow, the comps used can be months old, representing prices that were negotiated up to a year earlier. In a falling market, the appraised values are averages up over market prices, except that a higher appraisal has no effect on a sale at lower price. In a recovering market, this averages down appraised values, but in this situation they adjust the sale price down too. In a level market with normal inflation, the inflation pushes down appraised values. Since so many sale contracts have appraised value as the upper limit, this puts a very slow-moving ceiling on growth. This is also a problem in a mixed market, where the cash sales are the only ones free of appraisal limits and these are typically bargain sales that bring down the averages. We need to adjust our policies to allow for growth - or adjust the appraising logic to consider the time-value of comparable sales.

@Faceman

Now, now - let’s not get on the big bad bankers kick. On residential loans, bankers have NO CHOICE but to adhere strictly to the appraisal. Thank your federal government for that.

Policies don’t write themselves. The modern legislator cannot exist free of influence, and the more money an interest has, the better represented they will be in policy. This fact is unassailable. I’m not writing a conspiracy theory, but let’s not be naive and think because it’s law or policy, that all aspects are in the best interests of the people. We might be looking at a victory by the bankers’ lobby.

That’s all. I’m happy to learn more about this subject by PM, really I’d like to understand this situation better.

David

[hudsonhunter]

All I do is sell Equestrian Properties so I get this question a lot. My brokerage firm exclusively lists 100% horse properties in New York.

The short answer is YES adding stalls ads value and (assuming you market to horse owner property buyers) it can be the difference between whether they buy your farm or another farm if they want turn-key, move-in ready.

HOWEVER, Never, ever, EVER expect to get back a dollar amount from what you put in with a “horse property”, Period.

You may be pleasantly surprised and that $8,000 in stalls might ad $20,000 in value but don’t count on it and certainly don’t (when you do go to sell) price your property based on what you put in.

Price your property based on the current market values and for goodness sake HIRE an equine property specialist to give you a property CMA.

If there are nicer farms selling for less money than you have into your farm, then keep that in mind and do your improvements because you want them and you will enjoy them NOT because you expect a return.

In my experience the only Investment real estate properties are multifamily rentals and commercial property rentals.

Your primary residence is rarely EVER going to be a money maker.

Think of inventorying the building materials of your stalls like putting shoes on your horse or feeding it.

Just because you spent $1000 on shoes last year does not make your $20,000 horse a $21,000 horse…but if you had not spent the money on his feet he might not be worth any thing at all to anybody this year.

Also horse training is a great metaphor. Imagine keeping track of every penny you put into training on a horse…and then trying to tack that on top of what you paid. Sometimes it might work out but more often than not there is a cap and that cap is similar to your CMA on your property.