Appraisals - the dilemma.

[s219]

We have some restrictions here similar to what plowhog mentioned. I could not combine/divide parcels, but I could do a boundary line adjustment between them and move the property line to accomplish my goal. Cost about $4K for surveyors, re-filing plat, etc. Not too painful.

 

[beowulf]

Well, the discussion has morphed a bit beyond an appraisal issue. Some clarification to points raised. AG 160 zoning per County means one dwelling for the 160. Also means you cannot sell off or sever (partition) less than 160 acres without getting a zoning variance. The 90 acres is already non conforming but at this time County does not care about that. Initially told I had to go through a DRA process to be permitted to build another home on AG 160 zoned property. I did that - paid the $1,800 fee and had to submit a lot of supporting info and documents. In that the course of that process a supportive County rep found a way to let me build a second home without the DRA process and he refunded the $1,800. I double checked what he told me and rechecked that - an exception - not easy to find that but it was there. Even the local brokers were surprised as they had also told me AG 160 meant one home per 160 acres. So, now we have permission to build a second home on our property and as daughter wants to live here and it helps us out - projects, easier to leave and travel, and more - it is a win win. Just need the appraisal to get a loan, or, finance it ourselves which we can do - just prefer the loan route.

A lot line adjustment - I have been told - would pertain in different circumstances - between me and adjacent properties. Anyway, I can apply for a zoning variance, or can apply to divide the parcel with all that that entails.

HOWEVER, for our purposes - we have a succession plan with options that manage all we can foresee and contingencies for changes in circumstances. All are on board with the plan. No tax issues, gifting issues managed, - all taken care of and puts us where we want to be now and provides for where everyone wants to be in the future - has flexibility, including possibility that daughter and SIL may move to our home (where the amenities are) when we are gone and rent the other home, and/or use the cash part of their inheritance to buy out the other daughter's interest. Anyway - that is not the issue I posted about.

Anyway, there is no desire or reason to downsize or move anywhere (that would be the precise opposite of what we want), and no need to sever. This is where we want to live - living the Blue Zones. All doable if I pay for the appraisal, or self finance the build which is also doable.

Appraisal for a loan is the issue - not a succession plan. We have been able to borrow on the property twice before without any issues at all. And this time immediately after we provided tax returns etc., and credit checked, we were told that the loan was approved subject to the appraisal and any appraisal will be over twice the loan amount requested. So, will likely bite the bullet and pay our bank for the appraisal - the same bank that has loaned on the property before.

 

[plowhog]

A lot line adjustment - I have been told - would pertain in different circumstances - between me and adjacent properties.

Appraisal for a loan is the issue

Understood completely that the loan is the focus.

But if a future split is ever needed, I would investigate to see if prior parcels exist. What you were told with lot line adjustments is generally correct, but it isn't the only use for them.

Good luck with the loan!

 

[MossRoad]

I'm still amazed at the difference in prices to get government services such as zoning done in different parts of the country.

As for appraisals, we have a home equity line of credit as a 1st mortgage. Ours is good for 10 years. It requires an appraisal at the start. The appraisal is a few hundred dollars for us. It's considered a 1st mortgage, so it qualifies us for property tax deductions in our county. Since we rarely have a balance on it, and when we do, it's only a few hundred dollars a year in interest, that interest we pay is actually less than the property taxes we save by having a property tax exemption for a 1st mortgage. It's the only time I feel like I'm getting one over on the system.

I'm not recommending it for the OP to borrow money, but if he's going to borrow money, this includes the appraisal and it's good for years and years (the term of the mortgage) and allows you to pull equity out of your house quickly when needed, and pay it off as fast as you want. And there may be some property tax savings for having a mortgage depending on where you live. And the mortgage interest is deductible if you beat the the standard deduction when you itemize. Whereas, I don't think personal loan interest is tax deductible. It doesn't make a difference to us, as we've itemized for 35 years and never beat the standard deduction. Your mileage may vary, etc.

Good luck in your process.

 

[MossRoad]

....

Anyway, is this a widespread issue due to hot housing market or a California issue, or a rural property issue? Just wondering. Getting into a first home is an exciting time but it is very frustrating to see our daughter and SIL see the costs go up like this for their first home.

As to your particular issue with finding an appraiser, when our home equity line of credit expired a couple years ago, we wanted to renew it. It took about 4 weeks for the appraiser to get to us. That was 2 years ago in South Bend, IN.

From everything I've read and heard over the past 6 months, the housing market is going nuts nationwide, and with so many houses selling, buying, new mortgages, etc., it's probably a nation-wide issue finding an appraiser with an open schedule.

Again, good luck with your process.

 

[beowulf]

From everything I've read and heard over the past 6 months, the housing market is going nuts nationwide, and with so many houses selling, buying, new mortgages, etc., it's probably a nation-wide issue finding an appraiser with an open schedule.

Again, good luck with your process.

MossRoad, thanks for the input and support. I think you are right about it being a nationwide issue - that is what I am being told - and it is much more of a problem getting an appraisal up in the foothills. A local broker up here told me that he is having the same problems closing loans on properties due to appraisal issues - he said an appraiser can do 2-3 appraisals in town in a day, but only one up here. He also said a lot of appraisers are unfamiliar with larger mountain properties and so lack the confidence to do those appraisals. He gave me a name of an appraiser but the lender said they cannot use a borrower's recommendation.

As you say, a HELOC will live for years, and the $2,500 appraisal fee to get it done and over with makes sense - even though it appears to be overcharging and I have a visceral reaction to that - marketplace rules I guess. Another way to think about it is that the HELOC loan fees are much lower than conventional loan fees with points and all that they add in there. So that helps in getting over the distaste of overpaying. I also like the flexibility of only incurring debt (taking draws on the HELOC) when and as the money is needed.

I will be pulling the trigger today. Thanks again.

 

[dodge man]

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.

 

[beowulf]

For all of you who were kind enough to respond, an update:

I talked to my bank just now - great relationship there by the way - she is also puzzled by the $2,500 proposal. I gave her the green light to go ahead. She said she will send a copy of the 2010 appraisal to their appraisal department and ask that that be sent to this appraiser and see if that would help reduce the cost as she said he may think it is a much more major undertaking (90 acres- foothills, etc.) than it actually is and may think he has to value the entire 90 acres/trees/timber/springs/fences/and more. I thanked her and told her that if that even if did not work to go ahead and schedule it. She said it would be in mid-September based on her last conversation with the appraisal officer.

So, unless something changes, we are rolling.

 

[MinnesotaEric]

I have mentioned that my daughter and son-in-law are building a 'second' home on our property. We have 90 acres and they love it here, and we are getting older and slower, so it all makes sense. We discussed borrowing $200k to supplement their savings and a bit of help from us. That would be a loan they would be paying on, but as the property is in our names (wife and me) we have to be the borrowers. The cost of the project including well, septic, pad, etc. will be in the $350k range. Anyway, we owe nothing on the property which is worth at least $600k - and I would not sell for less than $900k. It appraised for $450,000 in 2010 or so, and we have since added solar and made other improvements and our particular location is a preferred location in the area.

Our first problem was finding lenders who would lend on more than 10 acres - finally did that - there are very few. So we applied - great net income, 800+ FICOS, no debt, great ratio of loan to value - so we selected a lender who immediately approved the loan - subject, of course to the appraisal.

Well we applied March 4th, had all documents in by March 6th, and since then have been waiting for the appraisal. They kept saying that there were "delays in finding an appraiser in our area" - over and over and over this is the message. In the meantime the construction costs for the home went up by $22,000 due to lumber price increases. I finally pulled the plug on the application with that lender after being told no appraisal was scheduled and they did not know when or if it could be scheduled. I did confirm - by calls to local appraisers - that there is a backlog of appraisal requests. Then I contacted other lenders but none would commit to a reasonable time line for an appraisal. I offered to pay double any appraiser's fee.

I did find one lender who was willing to do a no-appraisal loan (because of the value they saw plus fact that the new home would also be additional security) but they backed out when they saw that the zoning was AG.

Finally, I contacted our own bank (they do HELOCS but do not do conventional loans) and applied for a HELOC - higher interest rate, but interest is only accruing from the draw dates and we intend to pay it off quickly anyway. Last week they called and advised that the first six appraisers they contacted turned the job down but they found one who was willing to do it for $2,500 (the going rate has been about $400-$500), and he could not do it until September (that date is okay).

At this point, we are either going to finance the project ourselves (we can manage that but would prefer not to go that route), or just bite the distasteful bullet and pay the $2,500 appraisal fee. Likely that is what we will do.

Anyway, is this a widespread issue due to hot housing market or a California issue, or a rural property issue? Just wondering. Getting into a first home is an exciting time but it is very frustrating to see our daughter and SIL see the costs go up like this for their first home.

In my area (rural north central MN) appraisers are running about 45 days out with local banks. Big, national banks take longer because they lack the local contacts.

 

[MinnesotaEric]

I borrowed from a bank that specialized in land loans and keep loans "in-house". I went with a 10 year balloon payment loan and used land as collateral. I think you just need to find the right bank. A handful of states have banned consumer balloon payment mortgages.

Kevin

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?