Rural property appraisals

[Redfox]

I have a contract on a 70-acre rural property. Most of it is grass pasture. There are 3 out buildings, one of which is an old bank barn. Overall it’s a fairly nice property. Everything was smooth until the bank appraisal came back. They could only find one similar sized property that closed in the past year, and the remainder of the properties were 5 and 10 acre properties. Since the land is non-divisible, they valued the land at a very low cost per acre. Thus, there was a huge difference between the selling price and the appraisal. Thus, there is no loan unless I kick in a huge amount of cash. Have other folks had trouble acquiring financing for large rural properties? Are there specialized rural property appraisers? Ultimately it is up to me to decide if the appraisal is way low, or the property is way over priced, but the risk involved with the situation is very high. /forums/images/graemlins/confused.gif
Has anyone been in a similar situation from either the buyer's or seller's point of view?

 

[BB_TX]

You can go to the local tax appraisal district office and find out the appraised value of all the surrounding properties, whether they have sold recently or not. Need high appraisal to get a loan. Need low appraisal to avoid high assessment taxes. /forums/images/graemlins/crazy.gif Danged if you do, danged if you don't.

 

[bczoom]

RedFox,

Can you give us an idea of where this property is located?

Brian

 

[Redfox]

Central PA. North of Harrisburg.

 

[riptides]

Yep, talk to appraisers that do RURAL land. Maybe a real-estate agent that had a prior sale in the area can get you a name.

Went through the same thing about a year ago. The zoning of the property makes a HUGE difference. 10 minutes away and your looking at 40k per acre differences. No kidding.

It is an interesting situation buying "rural" land. Good luck!

-Mike Z. /forums/images/graemlins/grin.gif

 

[gsxr1100]

The delta in appraisal and selling price are always different. Selling prices should be WAY over the appraised price.

As noted above, our City has everyone assessments online. Plus I can see what they paid & when, Sq/ft, load, easements, water lines, trash routes, etc etc. And people are getting 50 to $100K more then what the City says. I know my City is about $60 less then what the re-fi people said. Then when they came out I could get another 20K more. So you taxes are low but when you go to buy, the buyer takes it…But the seller makes out! J

 

[bczoom]

Redfox,

I just sent you a PM.

Brian

 

[BillG_in_TX]

Redfox,

Have you talked to your local Farm Credit Bureau? Depending on your location, you might contact MidAtlantic or AgChoice. Each agency has a specific geographic territory that they service. They specialize in this type of loan, and handle appraisals in-house.

 

[bczoom]

</font><font color="blue" class="small">( The delta in appraisal and selling price are always different. Selling prices should be WAY over the appraised price. )</font>

Mike (and others in general),

Are we mixing the words for "appraised" and "assessed" values?

I'm thinking "appraised" value is what is used outside of the tax books to determine a properties value (for selling, insurance...).

"Assessed" value is what's on the tax books.

When a property is purchased, it's common for the county (or whomever) to change their "assessed" value to the purchase price as that reflects current value. It stays at that price until/unless there's an improvement to the property or a town/county wide re-assessment.

Example:
If I bought a piece of property 10 years ago for $100K and did no improvements and there was no re-assessment, it stays at $100K. But, over the 10 years the property has increased in value and it's current "appraised" value is most likely much higher.

Brian

 

[dmccarty]

RedFox,

I had a similar problem when building our house. Ours should have been an easy problem to solve since the house was on 4.5 acres and there where several lots that had sold in the same subdivision. Getting an appraised value on the land should have been easy. It was not. There was a thread I had a year or so ago on the subject. The lots that had just sold went for roughly $20,000 an acre for 2-3.5 acre lots. I figured our lot should be around $15,000 an acre. The first appraisers came in at something like $6,000-$8,000 an acre. We told the bank to get someone who knew what the heck they where talking about. She came in at around $12,000 an acre. We sold a 5 acre lot at roughly $15,000 a few months after all of this.

I was not impressed by the Appraisers. Nor was I impressed when they came out to check on the house when it was being built. They would not walk off the drive since that would get their shoes dirty.

On larger parcels like yours what I did was check out the appraised value of the neighboring parcels at the county tax office. The appriased values can be close to FMV depending on when the last tax valuations had been done. In my county we just went through valuations this year. If anything the taxed value is higher than the FMV. But that is a another thread.

Your county might have this information on the Internet. If not you might have to spend a few hours at the court house. One thing to consider is if the land has some sort of covenent that lowers the tax value. I don't know how this would show up in the records. For instance I should be able to lower my tax payment since my land is under a timber management plan. Farmers can do something similar. I just don't know how that shows up in the records.

On the other hand if the tax valuation have not been done in a few years you might see various prices. If one parcel has just sold then that valuation will be higher than neighboring land because of the sale. We have a 50 acre parcel to our west that is something like twice the dollar per acre than other local land since it just sold.

We bought a similar size parcel as what you are doing. We had been looking at land for years so we knew what prices where fair or not. And I check things out at the tax office.

Good Luck,
Dan