Because today was appraisal day.
Part of the challenge was the “uniqueness” of the lot. A 34 acre parcel this close to town doesn’t come on the market too often. Or as the report reads “The appraiser researched all towns in Cumberland, York & Sagadahoc Counties over the last 2 years and there have been NO closed sales of similar quality and size.” And given that the process is highly dependent on those comparables, it required just a smidge of creativity. In our case, they ended up using a 37 acre sale on the Hunter Road here in Freeport, a 28 acre sale in Scarborough, a 28 acre sale in Saco (yes, Saco) and a 35 acre “listing” in Brunswick.
The Hunter Road and Scarborough’s appraisals were marked down for “lack of ocean/water influence” and “lack of utilities.” The Brunswick listing took a big hit because it’s still on the market. (And having a parcel that has been on the market for at least two years included in comps is nothing short of crazy talk…)
“Highest & Best Use” was also a consideration. This paragraph sums it up nicely :
“The highest and best use of the subject property ‘as vacant’ would be to be improved for use as multiple residential house lots. On the day of inspection, the subject parcel was not subdivided into separate lots. Since any subdivision has not yet been completed, the highest and best use of the lot currently is as surplus land, bringing a much lower return on value than it would as subdivided lots based on research and and sale prices of smaller lots in similar settings. It is unknown how many lots could potential be subdivided from the parent lot and if the water and soil samples would support subdivision. Any subdivision into smaller lots would be speculative in nature and not taken into consideration in this report. Per the listing broker there has been no subdivision plan or survey completed on the parcel.”
That’s a big paragraph that boils down to “speculative property.” (Or Ramblin’ Rose) Which is why the bank gets nervous. Toss in some ugly national events around 2008 involving overvalued property and appraisals have been trending low. Red Sox winning percentage low.
So I don’t think anyone was shocked with today’s appraisal number. Not terrible, but definitely less than we were expecting.
And that’s where a good realtor and the process kicks in. We pushed the appraisal back to the seller and her realtor with a “we’ve got a problem here.”
Bottom line — we covered the electricity, the driveway and part of Rob’s fee today. Our appraisal lemons got turned into lemonade.
Closing next week.