Over the years I think I’ve witnessed everything possible when it comes to appraising recreational type land. This isn’t anything like appraising commercial land that maybe a Walmart or Lowes is going to build on , that’s a whole different animal. When it comes to appraising recreational land the “rules” are few and far between. Let’s get to it …
When recreational land is appraised it’s almost always required by a lender so there isn’t a whole lot anyone (the buyer) can do about it. Lenders can’t seem to help themselves when it comes to this kind of stuff. It’s one of those “we always do it so …” things that no one can justify. We can’t ignore the fact we are a society more concerned with covering our ass than accomplishing something in the most cost effective way possible. That’s just the world we live in. So what is the significance of this exercise ? There is none other than someone can say ” I have the appraisal right here ” when they’re asked about it.
Here’s what happens : A lender calls an appraiser to give them an opinion on a piece of land they want to lend money on. This person then goes through their process, which takes about 10 minutes , and a week later they email the info to the lender. I’ve seen many times over the years the person who’s producing this info didn’t even go to the land. If they do go there all they do is take a picture from inside the car just so they can prove they were actually there. The whole appraisal itself is based on what land in the area has sold for recently but it doesn’t take into account the differences in these properties just like the differences in houses. All that’s considered is ” 5 acres in such and such town ” . At some point the appraiser will call me and ask ” what’s the number this has to be worth?”. This isn’t exactly a process that leads to anything other than someone moving paper and checking one more thing off the list. One time I had a bunch of lots on a beautiful river , must have had 12 lots there. So approximately half are sold/closed so there’s plenty of info a person needs to place a value on the lot next door. What struck me most about this place is it seemed like every one of these parcels looked alike. Anyway a guy comes along who wants to buy one of the remaining lots and goes to a local bank for the loan. The bank orders an appraisal which resulted in this person estimating the value at $60,000 (times were good then!). The sale price was under $40,000 by the way. So a couple weeks later another person wants to buy the lot next to this one that was just sold. Another lender who then calls a different appraiser. This time the value placed on this lot was $20,000! There are probably 8 recent sales that can be seen from this property and all of them were sold for over $35,000 yet the appraisal comes in at $20,000. Maybe the appraiser was a local Realtor who’s a little ticked off they aren’t selling these lots? Who knows , all I know is the whole thing was a waste time and money.
If you’re buying and your lender requires an appraisal there probably isn’t a whole lot you can do. IF you’re selling your land or considering buying a lot and someone pays for an appraisal beforehand I would consider that nuts. What most people won’t consider is the market will decide what a piece of land is worth. It’s worth what it sells for no matter what anyone else thinks and that’s just how it is. If anyone tells you they had their property appraised and it’s worth “this much” I would politely tell them the appraisal is irrelevant because it is. I almost consider appraisals on par with title insurance in terms of “what do I need this for”.
Ok well I’ve offended the appraisers out there so who’s next on the list ! Hey if ya want to talk about some great property where there is no appraisal to worry about then check us out here http://www.mooseriverland.com/ . Spring looks to be here for real now and prices are still ridiculous. Thanks for tuning in and be sure to share my blog info and comment if you have time , unless you’re and appraiser ! DON’T FORGET TO SIGN UP AND RECEIVE ALL THE LATEST FROM THE KNOWLANDNY BLOG AS IT HAPPENS !