Appraisals - the dilemma.

[STx]

Puffy, what you say lines up with my thinking. We could finance without a loan but a loan made sense because of the interest rates right now, and because I am 77 and want to protect funds for my wife when I am gone, because I want our daughter and SIL to be a bit more directly involved in the finances, and finally - and this is important - we have another daughter and we have always managed things fairly between them- I told the home building daughter that whatever we 'give' them I have to find a way to impart similar value in some way to the other. They understand this. So, in a way, if we use savings for this build, it costs us twice as much as we have to give the same amount, at some time and in some way to the other daughter.

We have always been willing to help, as both daughters have turned out really well, they both worked two jobs during college, have always found jobs on their own, and mostly paid their own way. After college we told them we would pay their car insurance and cell phone bills for six months and they had to take it over then. Same with other things. It has worked out well. We also gave them each $500 into a Vanguard account at HS graduation, explained investing, and how contributing would build that up. They have contributed over the years and now, they each have over $60,000 in those accounts - part of their current savings.

Your age is probably causing part of your problem with lenders, unless you're looking for a very short term loan. At a certain point, they worry you won't live long enough to pay the loan back.

If you're going to use larger acreage as the collateral, you need to go to a farm credit lender, they're usually cooperatives of some sort where you have to be a member. We bought our 190 acres using Texas Farm Credit, they have different versions of that in most states, here's Ca - California. Search for "California Farm Credit" or farm credit for your county in Google and you should find more.

The appraisal on our 190 acres was $1800 and it took about 8 weeks to get it done last summer. Ag appraisals are different than a typical subdivision lot appraisal, it requires different skills to value undeveloped land.

I know you've said you didn't want to do this but, the fastest/easiest way to handle this is probably going to be to split an acre out and just give it to your daughter and then let her go get her own construction loan. There are construction loans that will convert to a regular mortgage once the house is complete and you have a certificate of occupancy (if required by your jurisdiction). Their age and the smaller parcel is going to be more attractive to lenders and you're not going to need the appraisal since the loan is for the build and paid in draws as it's completed, instead of based on the value of something that already exists. You can always co-sign for them if it's needed.

 

[plowhog]

Your age is probably causing part of your problem with lenders, unless you're looking for a very short term loan. At a certain point, they worry you won't live long enough to pay the loan back.

"Mortgage lenders are not allowed to use age as a factor for denying borrowers a mortgage loan. Thank the Equal Credit Opportunity Act for this; the federal law prohibits discrimination based on everything from a borrower's age to that person's race, color, or national origin."

I know you've said you didn't want to do this but, the fastest/easiest way to handle this is probably going to be to split an acre out and just give it to your daughter and then let her go get her own construction loan.

Advising "fastest/easiest" to split an acre off is contradictory of the costs and complexity of doing a "Parcel Map Split" in CA. Not to mention the OP earlier wrote his acreage is already non-conforming re: current zoning, making it questionable if a Parcel Map Split would ever get approved even if the OP pursued it and paid the expensive up-front fees which are non-refundable if the split is denied.

 

[STx]

"Mortgage lenders are not allowed to use age as a factor for denying borrowers a mortgage loan. Thank the Equal Credit Opportunity Act for this; the federal law prohibits discrimination based on everything from a borrower's age to that person's race, color, or national origin."



Advising "fastest/easiest" to split an acre off is contradictory of the costs and complexity of doing a "Parcel Map Split" in CA. Not to mention the OP earlier wrote his acreage is already non-conforming re: current zoning, making it questionable if a Parcel Map Split would ever get approved even if the OP pursued it and paid the expensive up-front fees which are non-refundable if the split is denied.

I'd not read far enough to see the costs in involved in splitting it. My mistake on that.

Whether they can use age as a determining factor or not, I can tell you without a doubt that a lender is going to look at expected lifespan as part of their determination of the ability to repay. Sometimes it means they require credit life insurance, sometimes it means they don't approve the loan. There are lots of reasons that can be used to officially deny credit to older borrowers, like income is from investments instead of a W2 job.

 

[beowulf]

Your age is probably causing part of your problem with lenders, unless you're looking for a very short term loan. At a certain point, they worry you won't live long enough to pay the loan back.

I know you've said you didn't want to do this but, the fastest/easiest way to handle this is probably going to be to split an acre out and just give it to your daughter and then let her go get her own construction loan.

I have found lenders willing to loan the money. Loans were approved almost immediately but subject to an appraisal. The problem: those lenders were not able to locate an appraiser so the loan could be finished so we waited and waited for the appraisals to be scheduled. It is now my opinion that they were not get an appraiser because there is a backlog of appraisals, because mine is rural and more complex, and perhaps they were not offering enough - I was asked to pay the appraisal fees in advance - $500 once, and $400 for another - clearly not enough. We now have one scheduled at a higher and likely reasonable fee.

No one asked about my age, and they have the security of the property anyway. As a practical matter, there would be enough cash to pay it off if necessary.

I have covered the split off of the property issue before.

 

[plowhog]

those lenders were not able to locate an appraiser

Does this mean your major focus is getting an appraisal?

 

[beowulf]

Actually, I am not sure anymore.

 

[MinnesotaEric]

Some posters here have commented about the potential for future trouble with your intended direction. By constructing this second residence, occupied by others, you are migrating from a property you solely own to some level of joint ownership / shared ownership. You will lose some significant rights to your land and property when that takes place.

You might consider negotiating a buyout clause or some sort of provision that would govern if things explode in the future. It's hard to envision, when things are going well, and there is family harmony, that a bitter dispute could erupt. But circumstances do change over time, and they will change-- you just don't always know how. The differential in ages could trigger differing points of view about how certain things should be handled.

I was previously involved in a family joint ownership that worked well for years. Then it slowly degraded over time, finally resulting in years of expensive battles in court. Early in that process I had the opportunity to create such a safety net-- but was convinced I would never need it. After all, we are family .... right?

Not necessarily true. Assuming that the existing parcel is joint tenancy with the wife, then the wife will inherit the RE entirely. Trouble comes if others are added or they quit claim and switch to tenancy in common or some type of life estate. Can't know unless the OP shares. That said, I totally agree with your sentiment: what happens if the relationships sour in the future? We all know folks that after 30 years, wake up hating each other and other family members and wind up with a divide by two problems.

 

[plowhog]

Not necessarily true. Assuming that the existing parcel is joint tenancy with the wife, then the wife will inherit the RE entirely.

I'm not an attorney; therefore not qualified to advise legal matters.

But, generally speaking, my experience has been that in CA, once a person contributes $1 or more to a mortgage loan on property, they have acquired legal rights. In this case there would be documented history of months-to-years of payments in the exact amount of the loan.

The OP mentioned a life estate and presumably has a good attorney who has worked through this.

 

[beowulf]

The OP mentioned a life estate and presumably has a good attorney who has worked through this.

All worked out. I was an attorney until I retired in 2008.

 

[newbury]

Be careful

the lawyer who represents himself has a fool for a client

At least that is what my wife (a retired real estate attorney) tells me.