Long driveway and home appraisals?

[jk96]

We are getting ready to start a new home build just slightly out in the country. We've got everything lined up for the financing and are working on finalizing the floor plans so I can start the bid process. One thing just occurred to me, our driveway is abnormally long. Our preferred build site would be roughly 5,500 feet from the main road. I'm curious how negatively this would effect the appraisal of the home? Anyone else with any experience in this area?

I know this will be something I need to discuss with the bank and their appraiser, however it will be at least Monday before I can discuss with them. I thought I'd get some opinions if there is any appraisers on here or anyone with a similar length drive. Last thing I want to do is build our home and then not have it meet a needed appraised value due to a mile long drive. Thanks.

Edit: Total acreage is 84 acres.

Jeremy

 

[texasjohn]

Some years ago we bought our property and went to the bank to get house financing. Appraiser came out to look at property but got stuck in heavy rain on county road , poorly maintained, on the way in. They refused to finance until county improved the road and that took me a year to get them to do it. If your access road is not currently all weather, you might face similar concerns....I dunno, I'd let them tell you rather than point out quality of road to them. They may also demand that the road be included in the building lot. From their perspective, if it turns out they end up owning the house, then they need legal access to it as well.

Best wishes...sooo many decisions ahead before you get settled into your new home!

 

[jk96]

Some years ago we bought our property and went to the bank to get house financing. Appraiser came out to look at property but got stuck in heavy rain on county road , poorly maintained, on the way in. They refused to finance until county improved the road and that took me a year to get them to do it. If your access road is not currently all weather, you might face similar concerns....I dunno, I'd let them tell you rather than point out quality of road to them. They may also demand that the road be included in the building lot. From their perspective, if it turns out they end up owning the house, then they need legal access to it as well.

Best wishes...sooo many decisions ahead before you get settled into your new home!

Thanks John,

The road right now is gravel but all weather and built well thanks to an adjoining property owner who decided to build almost as far back as us. It runs within about 800 feet of our build site right now. He built it right with a nice crown and planned drainage. The road is on a legal easement between our property and our neighbors. Given that, I can still see how if we decided to sell that much road could be a big negative to potential buyers who didn't want to maintain it.

The house is the only one we plan to build and we plan to retire there, however I always like to think long term. Never know what's ahead. Here's a view from the hunting blind that sits about where we plan to build.



Jeremy

 

[TMR]

Jeremy...in the '80s we purchased 300' of lakeshore and about 2.5 acres on Lake Superior's North shore. We had planned to build on the property "at some time". The property had about 1/2+ mile of common road with around 10 other lots of similar dimension. The road was very marginal...had poor drainage and ditching...and had a steep hill topped with a sharp turn. The steep hill was also mostly glacial ledge rock. The original easement and homeowners' association provided nothing for maintenance and/or major restructuring of the road. There was only 2 houses built on the lots in the 1980s...and still are only 2 today. The two houses had an informal cost sharing agreement and I think one owned a plow. Had to have class 5 hauled in after any significant rain.

These lots are spectacularly attractive and valuable...but the road with lack of road maintenance and construction process in the homeowners' assn docs makes it essentially non-investable for potential new homeowners. We sold our lot in 1990 (we did make a nice profit) and purchased a home in the country...I wish we had kept it just as a place to visit and plant trees The subsequent owner has also re-sold (likely at an additional profit).

BTW...a couple of the other lot owners would have been willing to spend the $$$$$s to have a proper road and maintenance agreement put in place...but most were not willing to do so...so it goes no where.

I would be very nervous about investing in a home on such a road unless there was a clear agreement in place among land owners using the road...to properly maintain and legal requirement to share in all road costs. It may be fine at present...but you never know who will own in the future. Probably would be buyers less concerned but perhaps the market would be smaller due to the road. I would guess that some/many appraisers and lenders would ask to see the road homeowners' association/road maintenance agreement...just like with our town home we own in Mpls.

Hope this is of some assistance...I don't mean to be a "wet blanket"... TMR

 

[texasjohn]

What a grand place to retire!! I can see why you are retiring and building there, a little slice of heaven!

Given what you said, I do not see that the road is a negative....it just is, and that's a good thing.

Regarding an appraisal, I'd think that once you are building something unique, such as you are, you have moved away from subdivision appraised values and into the dark and mysterious world of Ouija board values. In Texas many counties have a tax appraisal web site. There you can find a piece of property and all surrounding properties and see what their appraisals and taxes are.

Oversimplifying the process, from my experience, an appraiser will simply look at the surrounding property, ignore all details of your house except square feet and lot size, use a little math to adjust stuff and make it look like they are earning their keep and making a comparable comparison and that's your number. The recent housing bust shows how much smoke and mirrors appraisals are...if they were based on any "true" value, then the weird loans made would not have happened. The county gets its appraised values from ACTUAL sales of property. Thus, you are at the mercy of what the surrounding "comparable" property sold for. Thus, it is ALWAYS behind any "reality." If prices are going up, then appraisals are always LESS than what people are paying. If prices are going down, then appraisals are always MORE than what people are paying. Lag time is a function of property turn over rate and the calendar...typically at least a year or two out of sync with current market.

Fundamentally, a property is worth what some dang fool is willing to pay for it, using the bank's money(often 80% of appraised value which is less than cost of building) plus however much he is willing to add to close the deal. And, typically, the bank simply uses an appraiser and charges you his fee. If it were me, I'd simply visit the tax appraiser's office and talk with the local appraiser, in an "good 'ol boy" way..."I'm moving into here and want to get to know everybody and learn as much as I can about the area, etc..." Likely, this will be educational. And, visit local Lions, Rotary, etc....real estate people and appraisers are often stalwarts of those organizations...some ideas, at least...you know the area best and know how to network.

Best wishes on your financing and retirement!!

 

[jk96]

Thanks guys. The home will be a timber frame home so that in itself along with the location will make it unique. To us this is an added value, to others it would not be and probably limits the potential market some. We are going into this project with the idea that we will have to maintain the drive and any help from the adjacent owner would be a plus. My current drive is gravel and 1000' long so I've got an idea of what we are dealing with.

As for retirement, I'm 36 and have a long way to go, however we don't plan to build again so we are doing a lot of planning for the long haul. (all necessities on the first floor for example).

Jeremy

 

[unbidden]

My driveway/access rd is 2600ft of narrow twisting rolling gravel that could be in better shape. We had no problems with the bank on financing two years ago. As to your re-sale value, it's going to take a specialized buyer that would be interested in a property such as yours and mine so I don't think the road length is going to make an interested buyer say no because of the location.

 

[dave1949]

You mentioned the existing road is a legal easement between the two properties. Is there anything in the deed that says all properties using the road have an equal interest in the road? Did the existing neighbor build the road out his own pocket? If so, what are his expectations of your sharing the road?

In Maine we have private road associations with an established legal standing under state law. We can force a non-cooperating property owner with access to a shared private road to pay their fair share of the maintenance as voted on by a majority of the road association members. Perhaps you have something similar. With just two interested parties, you would have to be in agreement it seems for the road to maintained on an equal share basis.

The appraisal may be affected by the legal standing or legal maintenance requirements of the road which permits access to your property. In any case, appraisals aside, it would be good to fully understand the road situation sooner rather than later. If I had to guess, the appraisal will be a little bit lower than for an identical property on a government maintained road.

 

[TMR]

Jeremy...just a thought. How many actual current land owners either use or abut the common portion of the total 5000' road? If the land is mostly owned by two or three owners that may have common interests with you...perhaps you could ask/suggest having a simple "road maintenance" agreement drafted for the "common" portions of the road? Might be valuable years down the road if more land has been sold in parcels and there are more owners on the road?? I don't think it would cost too much to get a knowledgeable attorney to set up such an agreement. Food for thought...TMR

 

[TMR]

Well stated Dave...TMR

You mentioned the existing road is a legal easement between the two properties. Is there anything in the deed that says all properties using the road have an equal interest in the road? Did the existing neighbor build the road out his own pocket? If so, what are his expectations of your sharing the road?

In Maine we have private road associations with an established legal standing under state law. We can force a non-cooperating property owner with access to a shared private road to pay their fair share of the maintenance as voted on by a majority of the road association members. Perhaps you have something similar. With just two interested parties, you would have to be in agreement it seems for the road to maintained on an equal share basis.

The appraisal may be affected by the legal standing or legal maintenance requirements of the road which permits access to your property. In any case, appraisals aside, it would be good to fully understand the road situation sooner rather than later. If I had to guess, the appraisal will be a little bit lower than for an identical property on a government maintained road.