Appraisals - the dilemma.

[ponytug]

My daughter just bought a place in the far suburbs of Chicago. She got an appraisal in less than a month and home sales are hot in that area. I can’t remember the exact cost but it was about $450. It was a townhouse so a different situation but it still takes some effort and paper work. It had been remodeled since the last sale so it wasn’t like they could just print the last one and change the dates.

A guess on my part but because of your unique situation that makes the appraisers not want to do it for what ever reason. It could be because of the rural nature and larger property.

I know you have a plan of attack and I hate to wander off course but I am a retired land surveyor and I did 1 or 2 surveys a year where I broke out property from larger tracts of ground for a home build. In a lot of rural areas if it was more than 5 acres there was no approval process. If it was less than 5 acres it had to be approved by the county but that was a formality and they were always approved. It’s frustrating to hear of government regulations that appear to me to be to restrictive.

Well, in California, it is not straightforward and there are lots of regulations and statutes on the books that are designed to restrict development, especially in rural areas. They range from subdividing parcels, to minimum lot sizes (e.g. @beowulf's 160 acres per house, 40acre per house in my county), to who may, and where you may place septic, and the size thereof, to even where roads are permitted, or how much earth may be disturbed. The list goes on and on.

For example, redoing our existing deck due to rot required archeological, fire, seismic, geotechnical sign offs in addition to engineering and electrical. There is even a tax break for farmers and ranchers who keep land in agricultural use rather than building.

Folks are trying to keep up the rural quality of the rural areas.

But this isn't @beowulf's issue. Finding an appraiser is, and, for whatever reason, appraisers are in short supply in the Sierra foothills, in California, and in many parts of the country, as @MossRoad pointed out.

@beowulf I am glad things are rolling. Good luck!

All the best,

Peter

 

[Larry Caldwell]

Regarding my property, to do a "parcel map split," the County was going to require construction and surfacing of a new road on my property, turnouts for fire trucks, emergency water supply, utility easements, blah blah. But with the discovery of these previous parcels I can bypass all those requirements, and instead do a lot line adjustment for a total cost of about $10,000. The County cannot say no or refuse it.

It might be a good idea not to dodge those requirements. Fire engine access is a big deal. Just the next valley over, a doctor's house burned to the ground because the fire department wouldn't go up his driveway. Water storage for fire fighting is also a county requirement. My place was built before that requirement came in, but I installed it anyway. When I got the permit for my shop, it was one more thing I could check off on the application.

Of course, east of the Mississippi, fire suppression is not a big deal, though getting the fire engine, ambulance, or UPS truck to the house might be.

 

[Snobdds]

Why can't the daughter just secure the loan on her own? Just give her the land on which to build.

Seems so simple in my eyes.

 

[ruffdog]

I'm thinking that the OP doesn't want to draw attention with doing a land division. I would not buy or loan money on a house on someone else's land....period. Without the new house having its own lot, I think the only answer is the OP funds/builds it and carries the risk. No bank will fund a house that they can't sell in foreclosure.

 

[beowulf]

Why can't the daughter just secure the loan on her own? Just give her the land on which to build.

Seems so simple in my eyes.

I think I have thoroughly covered this in my earlier posts.

 

[beowulf]

Update: I just heard back from the bank. They provided a copy of the 2010 appraisal to the current proposed appraiser and tried to convince him to lower his fee as there were detailed descriptions in that appraisal of all the buildings and amenities.

He declined to do so citing: 1) the lack of comparables; 2) the complexity of the property, and 3) the size of the property. All of those things are true, and it is certainly not as simple as appraising a house in town, but it has never been an issue with two past appraisals.

The bank really did try to help with this - even tried to locate one of the prior appraisers but they are retired. Anyway, I told them to go ahead - $2,500.

 

[Snobdds]

I think I have thoroughly covered this in my earlier posts.

But if she "owns" land on which to build, she could then borrow against her land to secure funding.

what am I missing?

 

[Snobdds]

The only compliating factor is she is building on someone else's land. No bank wants that risk.

 

[MoKelly]

The only compliating factor is she is building on someone else's land. No bank wants that risk.

But - the problem isn’t the bank. The bank is willing to do the loan. It’s the fact the appraiser can’t get there until September and is charging $2500.

MoKelly

 

[beowulf]

The only compliating factor is she is building on someone else's land. No bank wants that risk.

She is not building on my land. I am building on my land. I am borrowing on my land. She will live there and pay what is equivalent to rent - an amount related to the loan payments or as agreed. And as MoKelly states, the bank, and other lenders, have always been ready to loan the money (great loan to value ratio) but the problem has been getting it appraised. Loans are approved subject to the appraisal - which is how it is typically done.

 

[plowhog]

It might be a good idea not to dodge those requirements. Fire engine access is a big deal. .... Water storage for fire fighting is also a county requirement.

Other circumstances are present.

A "parcel map" split would cost ... all in ... ~$300,000. That includes construction of a 50 ft wide road splitting through our property including turnouts. (We are almost at the end of a dead end road, so this requirement makes little sense.)

The County would require "donation" of 3 acres the road would be sited on. For no compensation. They would slightly revise our property tax down to reflect smaller acreage. They would also require additional easements for new utilities to run through our property including perpetual access to the property for maintenance.

As part of road construction, the County would remove 200 large trees, and stack them in my pasture. In CA, I can't legally sell a single tree without a valid Timber Harvest Plan. Preparing such a plan costs $25k-up and takes about a year. Without such a plan in place the trees would rot on the ground.

Another "parcel map" requirement is underground water storage tank(s) for fire fighting. We give the fire department access to our 2.1 million gallon pond during emergencies. So I asked if the tank requirement could be waived-- nooooo.

A lot line adjustment takes maybe 3-4 months, is simple, and costs about $10k. The weirdest part is such a split it not even for us-- we have no intention of ever selling. Rearranging into multiple parcels offers more flexibility regarding a future land trust or conservation easement-- areas we want to explore since it is a unique property.

[Apologies for hijacking the appraisal thread!!]

 

[TractorGuy]

Have you tried searching for different lender options?

California Land Loans | Land Purchase Financing | AgAmerica

Our custom California land loans help property owners with agricultural financing when looking to expand their avocado orchards, dairy farms, or croplands.

agamerica.com

 

[beowulf]

Have you tried searching for different lender options?

California Land Loans | Land Purchase Financing | AgAmerica

Our custom California land loans help property owners with agricultural financing when looking to expand their avocado orchards, dairy farms, or croplands.

agamerica.com

Already have a lender and awaiting the appraisal.

Ag financing I have found, requires an ag operation. Rates are higher as well. I never had a problem finding a lender given our FICOS, income and no debt - the issue was finding an appraiser.

 

[newbury]

I think I have thoroughly covered this in my earlier posts.

But who wants to read old posts?
It seems the modern method is to jump in and question or comment.

If appraisers are that hard to get I hope they find a good one for you.
When they appraised our Mississippi house in 2010 they valued what I call the "workshops"

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At $800. That is for 4 workshops, ~5,000+ sq ft total, all with electricity (400 amp service) and thick concrete floors, the big one has a 15x40 apartment with toilet, shower, stove etc.

So I don't trust appraisers.

 

[mikester]

Why can't the daughter just secure the loan on her own? Just give her the land on which to build.

Seems so simple in my eyes.

One of the prerequisites to becoming a bureaucrat is getting lobotomized. Thinking and reflection is frowned upon.

 

[dodge man]

Appraisers are like a lot of professions. They are licensed, have standards to meet, maybe an employee, maybe not. In this case I’m not surprised it’s costing what it is. Good luck moving forward.

 

[NoTrespassing]

Sounds like you went to a farm bank. Not everybody has banks that are used to working with people who are land rich, but steady income, poor. Your bank, did they treat your loan as a construction loan, using the land as collateral, and dolling out the money incrementally as improvements happened or did they lump sum lend you everything at once?

It was a small loan of about 50k with only 10 acres collateral and good credit rating/no other debt. It was given in a lump sum and used to pay off my ex . 10 year balloon paid off early.

Kevin

 

[Snobdds]

She is not building on my land. I am building on my land. I am borrowing on my land. She will live there and pay what is equivalent to rent - an amount related to the loan payments or as agreed. And as MoKelly states, the bank, and other lenders, have always been ready to loan the money (great loan to value ratio) but the problem has been getting it appraised. Loans are approved subject to the appraisal - which is how it is typically done.

The renting angle was a little vague, but you clarified it up.

 

[plowhog]

Some posters here have commented about the potential for future trouble with your intended direction. By constructing this second residence, occupied by others, you are migrating from a property you solely own to some level of joint ownership / shared ownership. You will lose some significant rights to your land and property when that takes place.

You might consider negotiating a buyout clause or some sort of provision that would govern if things explode in the future. It's hard to envision, when things are going well, and there is family harmony, that a bitter dispute could erupt. But circumstances do change over time, and they will change-- you just don't always know how. The differential in ages could trigger differing points of view about how certain things should be handled.

I was previously involved in a family joint ownership that worked well for years. Then it slowly degraded over time, finally resulting in years of expensive battles in court. Early in that process I had the opportunity to create such a safety net-- but was convinced I would never need it. After all, we are family .... right?

 

[beowulf]

Appraisers are like a lot of professions. They are licensed, have standards to meet, maybe an employee, maybe not. In this case I’m not surprised it’s costing what it is. Good luck moving forward.

Dodge man, initially, because my prior appraisals (many years ago) cost much less and because all the lenders I was speaking to now advised that the appraisal part of the loan costs would be in the $400-$600 range, my mind became sort of fixed on that range. So, when I was told an appraiser wanted $2,500 I thought it was way out of line. However, the reasons this appraiser gave for charging that much (difficulty finding comps, complexity and size of property) are all true. And the proof that the $2,500 may be in the ball park is the fact that lenders were unable to find an appraiser and wrap the loan for months - probably because the rates they were offering or usually paid were simply not enough to interest anyone. Even when I offered to pay three times the going rate - $1,500 or so - still no bites.

If I could start all over I would have tried to determine a true marketplace cost for the appraisal at the outset. But it was not until my HELOC application that we found an appraiser - the one at $2,500. I am quite comfortable with the cost now - just wish I would have been smarter at the beginning.