Appraising Proposed Construction: Sketches, Costs & Surveys
By Stan Choate, Office Manager
One of our more common appraisal requests is for properties with a proposed structure: a building not yet built. Any of our clients might order such an appraisal. Most often, this request comes from lending institutions, who need such properties appraised as though the structure has been finished, which they call as-complete or subject-to-completion. Here at Spurgeon Appraisals, we have years of experience doing such appraisals, whether the property is residential, commercial, or agricultural. In our experience, we need two or three items to appraise these properties effectively. Sometimes, we even need them before we can quote the project. We advise our clients to procure and provide these items before contacting us for an appraisal.
Proposed Construction
What to Provide Your Appraiser
For an as-complete or subject-to-completion appraisal.
Sketches
RequiredThe appraiser needs some way to measure and picture a building that does not yet exist.
Estimated Expenses
RequiredA list of materials and their costs. Construction cost is one of many factors in the opinion of value.
Survey or Map
Might be requiredEspecially for land split off from a larger property: how much land is being appraised, and where.
Provide these items before contacting us. Sometimes we need them before we can quote.
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Sketches Are Required
Whenever any of our appraisers visits a building, he measures the exterior, views the interior, and takes pictures inside and outside. This is part of the standard appraisal process. And if the building does not yet exist, the appraiser still needs some way to measure and picture that building. That is why clients should always provide the appraiser with sketches for the proposed structure. Naturally, more detailed sketches are better: file images of the blueprints are best of all. But if all we have is penciled lines on a sheet of copy paper, that is better than nothing.
Estimated Expenses Are Required
This requirement is based on the same motivations as the previous requirement. If the appraiser must estimate the value of a building which does not yet exist, a list of materials and their costs will be essential. We have often told our clients that construction cost does not equal market value—and that is true. But construction cost is still one of the many factors in an appraiser’s opinion of value. For a completed structure, we can work backward to estimate the cost to build it. But for a proposed building, we need the estimated expenses first.
A Survey or Map Might Be Required
Very often, a client will need an appraisal on a proposed structure to be built on a piece of land split off from a larger property. Perhaps that is because the borrower is purchasing that smaller piece, or perhaps the lender does not want to include more land in the appraisal than is necessary. Whatever the reason, the appraiser needs to know how much land he is appraising and where it is, because real estate derives its value partially from its size, location, access to public roads, and maybe even soil types. For that reason, be sure to provide the appraiser with a survey of the site. If a survey is not being done, an aerial image with hand-drawn lines is better than nothing.
Why the Site Matters
Where Land Value Comes From
Real estate derives its value partially from:
Size
Location
Access to
public roads
Soil types
Maybe
So the appraiser needs to know how much land is being appraised, and where it is.
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
More Detail Is Better
Best vs. Better Than Nothing
What to send when a perfect document isn’t available.
Sketches
Best
File images of the blueprints
Better than nothing
Penciled lines on a sheet of copy paper
Site
Best
A survey of the site
Better than nothing
An aerial image with hand‑drawn lines
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Our Clients Can Help Us from the Very Beginning by Providing the Above Three Items
Our appraisals are only as good as the information we have. The more data we have from our clients, the better our appraisals will be. At Spurgeon Appraisals, we refuse to cut corners. We will always provide the highest quality work as quickly as possible. Email us today for a quote.
