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.

 

[JD 4520]

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

Jeremy, this recommendation is absolutely critical in my opinion. Look ahead 10 years and you get a wash out in the road any you have different neighbors who could careless and on and on...you will have a problem if you don't have a maintenance agreement and how to fix, who pays, etc. you need this to sell your property also.

 

[jk96]

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
Jeremy, this recommendation is absolutely critical in my opinion. Look ahead 10 years and you get a wash out in the road any you have different neighbors who could careless and on and on...you will have a problem if you don't have a maintenance agreement and how to fix, who pays, etc. you need this to sell your property also.

Jeremy, this recommendation is absolutely critical in my opinion. Look ahead 10 years and you get a wash out in the road any you have different neighbors who could careless and on and on...you will have a problem if you don't have a maintenance agreement and how to fix, who pays, etc. you need this to sell your property also.

Good info and food for thought guys. Thanks. We own the property from the hwy all the way back to where our home would be. The easement sits on our property. The adjacent land owner put the road in out of his own pocket. There would be three total landowners along this road including us. There is only a verbal agreement at this point that I would share the maintenance cost of the road with him if we decide to build. I have the equipment and means to maintain the road myself if needed, however I can see your point about a formal agreement being important if we decided to sell at some point.

My initial posts was out of concern of the home not appraising enough to qualify for a fixed rate after it was finished due to the road but some additional points made are very helpful.

Jeremy

 

[Catfish Man]

I have a long driveway, the appraisers and banks don't care. The main issue I run into is with the insurance company. Lots of questions about how close to a fire hydrant we are, how accessible is the house to emergency vehicles etc.

These issues are further compounded by the fact that the house is on top of a very steep hill. Funny thing is my driveway is much better maintained and accessible than the county road.

 

[s219]

Thanks guys. The home will be a timber frame home so that in itself along with the location will make it unique

That's probably going to work against you on the appraisal. The house we're building now is a mountain/craftsman style, with a lot of exterior trim details (beams, brackets, rafter tails, etc) along with exposed beams on the inside. All of that cost $$ of course, but buys no favor with the appraisor. So as a result, our house is expensive per square foot, and we had problems with the appraisal. They just don't value anything that deviates from "standard" for other homes (comparables) in the area that have sold recently. I hope you have better luck with the appraisor than we did!

 

[MarkV]

Couple of thoughts. I don't think your appraisal will be affected unless the road is such that emergency vehicles can't easily get up it. As Catfish says your insurance company will be the bigger problem. As far as homeowner associations and road maintenance agreement go, I own a place with about a mile of private gravel road and there is a road maintenance agreement in the covenants. About 90% of the lots (5 to 10 acres each) are unoccupied and the owners are non participants when it comes to maintenance. Based on what an attorney told us the only way to enforce those covenants is to individually sue each non participating landowner and the cost would not make it practical. If your moving onto that much private drive I would recommend you do so with the thought that it could all end up being your problem. Gravel is expensive, grading and snow removal is very time consuming with that much drive. Privacy is priceless.

MarkV

 

[jk96]

If your moving onto that much private drive I would recommend you do so with the thought that it could all end up being your problem. Gravel is expensive, grading and snow removal is very time consuming with that much drive.
MarkV

My only real concern is with the appraisal and making sure the home appraises for enough that it doesn't effect our ability to get into a fixed rate. On the other hand, the land is free and clear so I guess we could partition off as much or as little of the land with the house to bring the appraisal up if needed.

As far as the our neighbor kicking in or helping out I'm sure he will but would not be upset if he didn't. He did all of the initial work including laying over 4,000 feet of gravel and bringing power all the way back. I'm sure there were several hundred hours of dirt work that went into the road as well. Thanks to our neighbor we are now able to build in a place on the property that we never thought possible.

Privacy is priceless.
MarkV

We are really looking forward to it. We started our business about 13 years ago. At the time we built our building, we decided to build a house on the upper level of the building. It will be really nice to actually leave work at the end of the day and walk into a regular home.

Jeremy

 

[frankroberts]

Bad idea in my opinion. We live at the end of a one mile long township road in southeast Minnesota. There are five houses on this road including us. I can't imagine having to plow, grade and mow roadside on this road. We get excellent service from our township who contracts for all this work.

I hope you are independently wealthy. I understand the desire for privacy and your spot looks beautiful. But there are way to many things that could ruin it for you. You're so young I am sure you just don't think they can happen to you. No offense but as you get older and see different scenarios play out over the years it opens your eyes.

When you decide to sell this place, whether it's two years from now due to a divorce or 40 years from now due to health reasons the pool of possible buyers will be very small. You will have no negotiating power.

My advice is to rethink. Build a weekend place out in the woods and build your home in a more accessible place. Another thing. Woman like to hang around with other women. Going shopping. Out for lunch etc. You're going to make that very hard by living at the edge of the universe.

But best wishes to you.

frankroberts

 

[dave1949]

Power is another consideration. I can't recall the details, but I think my power easement agreement with the local utility allows me to recoup some of the cost of the initial installation if it is extended to another customer. Just another detail to check on.

FrankRoberts post is food for thought. If this is to be a long-time home, it will pay to think ahead to a time when everything is a little more difficult than it used to be. :laughing: If you are concerned about finances, then don't over build beyond what the local conditions/market will support, or if you do, then be willing to walk away from that and put it down to enjoying life.

I don't know how much snow removal is a concern in your area, but a single axle dump truck with a snow plow will make quick work of a mile long driveway and the truck would be useful for driveway maintenance and other chores.

 

[edlegault]

Here in my part of CA any single property owner on a private, unmaintained, road can petition the other owners to start a road co-op. If not everyone agrees, that same person can take it to the county who assigns a judge to force a road co-op by court order. The cost is set proportionally by how far your property is from the public road. Those property owners at the back end of the road pay more of the cost and those up by the public road pay less. Whether you live there or not. Doesn't make a difference if there is a building or not on your property. The county's interest in all of this is to have roads wide enough and maintained enough for emergency vehicle access.

 

[jk96]

Power is another consideration. I can't recall the details, but I think my power easement agreement with the local utility allows me to recoup some of the cost of the initial installation if it is extended to another customer. Just another detail to check on.

Power is taken care of. We allowed our neighbor to bring the power along the county road frontage across our land, did all of the tree removal for him to save him some money from the utility and split the cost of the power run. It was actually surprisingly cheap for how long the run was.

Bad idea in my opinion. We live at the end of a one mile long township road in southeast Minnesota. There are five houses on this road including us. I can't imagine having to plow, grade and mow roadside on this road. We get excellent service from our township who contracts for all this work.

I hope you are independently wealthy. I understand the desire for privacy and your spot looks beautiful. But there are way to many things that could ruin it for you. You're so young I am sure you just don't think they can happen to you. No offense but as you get older and see different scenarios play out over the years it opens your eyes.

When you decide to sell this place, whether it's two years from now due to a divorce or 40 years from now due to health reasons the pool of possible buyers will be very small. You will have no negotiating power.

My advice is to rethink. Build a weekend place out in the woods and build your home in a more accessible place. Another thing. Woman like to hang around with other women. Going shopping. Out for lunch etc. You're going to make that very hard by living at the edge of the universe.

But best wishes to you.

frankroberts

Wow - I can feel my dreams crashing down around me. lol. Regardless a very good post with good advise. Thanks Frank. I am not independently wealthy but wish I was. I've been maintaining the road since it was put in two years ago since the back of the property is also my hunting place. Right now its not a big deal. An 8 foot brush hog takes care of the mowing easily. One pass down and one pass back up. Would I be able to take care of it in 30 years, 40 years, not sure and something to think about.

One thing we are set on is a timber frame home. After touring several homes in the region I just cant see myself settling for a traditional stick built home. There is just no comparison.

Another thing. Woman like to hang around with other women. Going shopping. Out for lunch etc. You're going to make that very hard by living at the edge of the universe.
frankroberts

This is one of the things that I really like about the property, it feels like we are at the edge but we really are not. It takes as long to drive our road as it does to get town. Even though our closest neighbor would be about 2,000 feet away, we are 5 minutes to the grocery store and 15 minutes to the mall and movie theater. The property is 2 miles outside of the city limits.

Jeremy