The Challenges of Appraising in
a Rural Market
By Matt Dutton, State Certified Trainee Appraiser
Why Rural Home Appraisals Are Challenging
Appraising residential real estate in Northeast Missouri and West Central Illinois can be quite challenging at times. No two properties are ever exactly alike, but the differences tend to be more pronounced in rural markets than in the typical suburb or residential subdivision. For residential properties, lot sizes can range from a few thousand square feet to many acres. It is not unheard of to stumble across a home on acreage within the limits of any city in the area, which further complicates matters. There can also be a wide disparity in the style of homes. Most of the new homes being built in this area are by owners looking to construct their perfect forever-homes. These homes tend to be tailored to the owner’s specific tastes and preferences—and any time a home deviates from the norm, the appraisal becomes much more complex. Additional difficulty arises from the fact that these homes rarely sell when they’re brand new, meaning that they aren’t as useful as comparable sales for appraising a recently constructed forever-home.
Northeast Missouri & West Central Illinois
Why Rural Appraising Is Hard
Differences between properties are more pronounced than in a typical suburb.
Lot Sizes Vary
From a few thousand square feet to many acres
Acreage in Town
Homes on acreage within city limits
Custom Forever‑Homes
Tailored to the owner’s tastes and preferences
New Homes Rarely Sell
So they aren’t useful as comparable sales
A real question appraisers face
How do you value a 10‑acre site in a city of 1,000 people where lots are usually 10,000 square feet or less?
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
When Comparable Sales Are Limited
In these instances, when comparable sales are limited, our jobs as real estate appraisers become much more critical. We are trained to solve these problems when there seem to be no answers. How can a person value a new home in an area where no other new construction has reached the market in several years? How can a person value a 10-acre site in a city of 1,000 people where the lots are usually 10,000 square feet or less? Finding comparable sales becomes a much more involved process, and it takes a knowledgeable eye to discern what is truly comparable and which sales will lead to the most credible opinion of value.
The Three Approaches to Value
There are three primary approaches to value – the Sales Comparison, Income and Cost approaches. There are several different techniques involved in valuing complex properties like these. One of the best skills appraisers can acquire is the ability to put themselves in the mindset of the typical buyer. We are generally trying to determine the market value of a home. Market value considers the most probable price of a property in a typical, competitive market.
Appraisal Basics
Three Approaches to Value
The primary approaches appraisers use to value complex properties.
Sales Comparison
Income
Cost
Market Value
The most probable price of a property in a typical, competitive market.
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Thinking Like the Typical Buyer
When a kitchen has new countertops but older flooring, would most people see that as being updated? Would most people pay more for an attached garage than a detached garage of the same size? In valuing unique properties, being able to answer the basic questions is critical. There is no substitute for knowledge and experience.
Think Like the Typical Buyer
Would Most People…
One of the best skills an appraiser can acquire.
…see a kitchen with new countertops but older flooring as updated?
…pay more for an attached garage than a detached garage of the same size?
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Our firm doesn’t shy away from the difficult and complex assignments. The professionals here at Spurgeon Appraisals care about providing quality appraisal work in a timely, affordable manner. Call us today to experience our top-notch service first-hand.
Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.
