Appraising Horse Property

By
Real Estate Agent with Century 21 Preferred
http://actvra.in/4vMh

Appraising Horse Property

 

 

 

How is a horse property different from any other residential property?

 

In most ways, horse properties are similar to any other residential property. All the same theories and techniques still apply in your valuation. They differ in how the importance of being allowed to have horses plays out in the appraisal process. Buyers and Sellers in this market care more about the number of horses that can legally reside on the premises than anything else about the property.

 

The selection of the comparables often cross the boundaries and guidelines set forth by financial institutions. It is important to have comparables that are or can be horse properties. To satisfy this guideline the appraiser might have to step outside the typical financial guidelines. Perhaps they need to use comparables that have different house styles, took place further back in time, are outside distance preferences, or even in a different school district.

 

How can we do this, step outside typical financial institution guidelines and still appraise a horse property for its fair market value?

 

We need to utilize sales that meet the financial institution’s guidelines and sales that give us a true picture of the value of the property we are appraising. Most of the time this will translate into using more comparables. Horse properties are harder to appraise, take more time and effort, and should compensate the appraiser better than typical residential appraisals. Good luck with that.

 

So, you’ve inspected the property, checked the zoning and building codes to see if all the improvements and number of horses is legal, and pulled comparables. Townships have different regulations as to the number of horses and the type of horse related improvements that would be allowed. You need to know what these are so you can find comparables that are similar to your subject property.

 

Although it would be tempting to value the contribution of the farm type improvements to the value of the whole, by depreciated cost, it could under estimate the actual contribution. Often existing farm buildings predate ordinances and add more value than just the depreciated cost new. The number of horses allowed on a property may be "grand-fathered" into the deed. If this property were to be without horses for a period of time that grandfather clause may disappear.

 

What are the considerations when making adjustments that may be outside the normal process?

 

Location adjustments are a function of how far you are from riding trails, are you off a main roadway, do you have to cross a busy street to get to the park, and are the neighbors horse people. If you have to cross a main highway- to get to the park, it is not a good comparable for your property.

 

Having horses in a horse dominant neighborhood is like living in a golf community to golfers. The social life surrounding a common interest alone draws perspective residents. These people don’t need good neighbors to watch the kids for them, they need a supportive community to help care for each others horses. If you needed to step outside the subject’s school district, you can but will probably want to adjust for a difference.

 

Small increments in lot size have a big effect on value if it makes a difference to how many horses are allowed. So an adjustment for lot size would consider the number of horses allowed, more than just the amount of square footage. How do you decide the size of the adjustment? You need to be very experienced in horse properties or do a lot of research and analysis to determine this.

 

Once I’m sure my comparables are similar to the subject, how can I make adjustments for the farm type improvements?

 

Then it would be acceptable to apply depreciated cost new or the same type of adjustments you would apply to a detached garage or permanent shed or structure of similar building materials.

 

Land improvements will also play a role in your adjustment process. It is desirable in the barn area to have a level topography, and good drainage. Riding arenas should be level, soft yet supportive, and drain well. Trees carefully placed and spaced can add desired shade but in abundance can detract from the desired use, and become a favored chew toy to the horses. Some foliage and trees are actually poisonous to horses. Fencing is important. Placing a value on the fencing is tricky. I would not give credit for fencing that isn’t in good condition. Proper sturdy fencing in good condition adds quite a lot of value to a horse property.

 

Keep in mind the most important feature in a horse property is the number of horses allowed. Find similar comparables and then make adjustments similar to the ones you would make in that particular market for a typical residential property. Don’t forget to explain why you utilized any comparables that are outside the desired guidelines of your financial institution.

 

Janine Campeau Ewald

NYS Certified General

Real Estate Appraiser

#46000003850

Click Here to read the original post.

 

Beth Good
PO Box 891568
Temecula, CA  92589 
cell: 951-251-5263
DRE: 01833600

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 02/10/2013 05:05 AM
Topic:
ActiveRain Community
Groups:
Horse Property Specialists
Horse Properties: Homes & Land

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Rainmaker
790,204
Bob Ratliff
Renowned Realty - Austin, TX
"Sold with Bob"

Hello Beth, thank for the education on marketing horse property and how to come up with an accurate market value. Very important for us to do our due diligence and research as much information as possible for our Buyers. Interesting facts I'll jump over to Janine Cmpeau Ewald to view the original post. Thanks

Feb 10, 2013 05:36 AM #1
Rainer
375,126
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor Advocate/Short Sale

Thanks for the posting, Beth.  I think you head the nail on the head when you talked about whether or not this horse property is in a location with OTHER similar horse properties.  This will make a significant difference in value.  Also, yoo talked the other important element... the improvements to the land to accommodate the horses, tack house, barn, corral, fence, riding trails and on!

Feb 10, 2013 05:53 AM #2
Rainmaker
1,547,604
Carla Muss-Jacobs, Principal Broker (503) 810-7192
BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Yes, I'm sure there is an art to this type of residential property and your post is very informative.  And what a lovely photo accompanying this post!  You should use it as your background for your blog!!  ;-)

Feb 10, 2013 06:02 AM #3
Ambassador
1,812,172
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Beth, I think you bring up an excellent point in inspecting the property for the appraisal and learning about the inspections of the comparables like with the distance to riding trails. The comparables in this category most definitely can not be done only on "paper." Great post.

Feb 10, 2013 06:46 AM #4
Rainer
250,313
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

Great post. This is the first blog I have read on Active Rain about Horse Farm appraisals. Thank you very much.  Jim

Feb 10, 2013 07:14 AM #5
Rainmaker
1,068,235
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

I sell a lot of farm and ranches and yes, they are unique to price and sell.  Knowing the value of the land, the structure, improvements, etc. are all key.

Feb 10, 2013 07:37 AM #6
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

Thanks for all the kind words and of course all credit belongs to Janine.  She originally wrote this for her area but as she stated to me earlier today on FB the principles would be applicable anywhere. Janine also  taught it as a seminar for continuing ed credits, too.  

Feb 10, 2013 08:08 AM #7
Rainmaker
290,499
Christina Sanchez Hood
Mountain View, CA
#SiliconValleyHOODS | Inspired Living

Beth, what a great lesson about horse property.  I have not had the pleasure of representing any equestrian homeowners or buyers in my area, however, I know who to refer to when thinking of Temecula :)

Feb 10, 2013 12:40 PM #8
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

Aww, thanks Christina!  

Feb 10, 2013 12:43 PM #9
Rainmaker
1,002,873
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Beth:  What a fabulous blog post.  And what a fountain of knowledge you are.  I have never had the opportunity to market a horse property, but you seem to be such an incredible expert on it.

I think anyone in your market area would be best off if they had you represent them.  I just know you wouldn't "steer" them wrong.  (I know that doesn't quite fit, but it's the best I could come up with... LOL)

Congratulations on your Featured Post and your Gold Star.  Well deserved!

Feb 10, 2013 01:40 PM #10
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

Thanks Karen, but all the credit goes to Janine Campeau Ewald who gave me permission to post earlier today.  This information is just too good not to share and I am pleased that others such as yourself are finding it as useful as I did.  

Feb 10, 2013 01:46 PM #11
Rainmaker
600,166
Pete Xavier with X Group Real Estate Advocates
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide
Beth, was just in the wine country area of Temecula, love your post, next post maybe on vineyard appraisals. ;)
Feb 10, 2013 03:26 PM #12
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

Duly noted, Peter :)

Feb 10, 2013 09:10 PM #13
Rainmaker
279,688
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Beth:

Thanks for the education.  I have quite a few horse properties in our area and always wondered how they came up with a price for them.  We have a few "horse friendly" towns that cater to the "jumping" crowd and even some local "hunt" clubs so it s great to have an insider's knowlege available.

Feb 10, 2013 10:12 PM #14
Rainmaker
1,216,340
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Beth, appraising a horse property is not an easy task. You really earn your fee on these and more. Good information!

Feb 10, 2013 10:37 PM #15
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

Evelyn and Michael.  Thanks for your comments.  Again, Janine deserves all the credit here.  Visit her site at https://sites.google.com/site/liaijanine/

Feb 10, 2013 11:08 PM #16
Rainmaker
2,103,267
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

 

Nicely presented and done...Inviting and informative...High confidence level at work. BTW...you have excellent city management in Temecula helping it to maintain its elegance and productivity as well as values...Good job Mayor Mike Naggar and the council too

Feb 10, 2013 11:50 PM #17
Rainmaker
418,377
Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

Excellent Blog and much appreciated!

Eve in Orlando

Feb 11, 2013 01:46 AM #18
Rainmaker
599,439
Maria Morton
Chartwell Kansas City Realty - Kansas City, MO
Kansas City Real Estate 816-560-3758

Beth, I wish more agents would include the number of horses a property can support in the listing remarks. That would really help when narrowing down the possibles. 

Feb 11, 2013 03:22 AM #19
Rainmaker
86,589
Beth Good Realtor
Century 21 Preferred - Temecula, CA
Temecula Horse Property Specialist

@Richie.  I agree Temecula has done an outstanding job.  Also, many folks don't realize this but in 2011 Temecula was rated the 2nd safest city in the United States.  Temecula's Wine Country is also becoming a highly popular tourist destination.  I am proud to live here and represent the many fine horse farms this area has to offer.  

@Mike & Eve.  Thanks for your comment!  

@Maria, that would be a good thing indeed!  The first step for them would be to familiarize themselves with the zoning.  I'd prefer it if zoning were a mandatory field in the MLS but as you know it's all in what the agent inputs.  I actually did a post on a zoning rule of thumb for Riverside County to provide some insight to buyer's and other interested parties.

Feb 11, 2013 10:57 AM #20
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Beth Good Realtor

Temecula Horse Property Specialist
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