My long time GF and I are trying to buy 16 acres and a 2500SF house built in 1997. The house is in great condition and has passed a very detailed home inspection and WDO with flying colors. The issue is that the area has gone from “old rural” to “trendy, horsey-set rural” within the past two years (and growing by leaps and bounds! There is a new $3 million plus “Equestrian Center” less than 3 miles away now!) and there are pretty much no comps for appraisers to get that reflect what the property is really worth…about $500K.
People are building (building…not yet selling!) $500K+ homes and land is $16K-20K and up an acre and up, mostly with a 10 acre minimum, but about all that can be found on recent MLS “solds” is raw land and / or $100K-150K homes with 1 acre or so, built many years ago. There is a brand new, gated subdivision just down the road…less than 1 mile…that requires a 10 acre minimum at $16,500 for the least desirable tracts, with a 3000SF minimum at-ground-level requirement and only brick or stucco allowed, but while the land has sold, there have been no new homes built yet.
We are sweating an upcoming buyers (we have agreed to pay for all such appraisals, WDO inspections and the like due to the desire to get this done as quickly as possible commisurate with common sense, blah, blah) appraisal due to the fact that the first appraiser we contacted called back and refused to do the appraisal because she was not able to find enough info to justify the price. The inspector who will do the actual appraisal is very familar with the area, and lives within 5 miles. I have not spoken with him yet. My feeling is that this property is actually undervalued by about $75K-100K, but that is no help if an appraiser cannot “bring it in” at or above appraisal value…obviously.
My question is this…are there “formulas” that are used…and acceptable…for such situations so that, for instance, you might take the average price of X acres of pasture land…fenced and cross fenced…and add the current average construction price of a decent, but not outrageous, home of the same size?..or are we just SOL on this one? IF there are…and I have a large problem believing that many other locations do not have the same issues to deal with…what are the accepted parameters of such “formulas”? If not, are we just out of luck? Or?????
Any experience, advice or suggestions would be GREATLY appreciated!
Thanks one and all!