Sketches, Expenses, and Surveys

by Stan Choate, Office Manager

January 2021

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.

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.

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.