Appraisals: How do additional building structures affect bottom line?

Question

We are considering adding a 20X40 shop building to our 1.3 acre parcel which contains a compact living quarter with an est. building cost of 20k how would you calculate the ratio of either +/- that this would add to your current appraised value? Do property fences have any monetary affect on appraisel value?

Answer 1

As an appraiser in my opinion the shop building would increase the value of the property. I do not know your exact location. I think that you should build the structure if it is necessary; not to try and increase the value of the home because it will most likely not yield a profit. Structures such as a shop building can be given a flat value or value per square foot; they are usually treated like a detached garage. In NY where I'm from detached garages are valued at 10k so if it costs more than that it is not a worth while investment. There are very few improvements that will yield a positive return on investment. You just have to look at it like this if two houses exactly alike and one had a shop building plus fencing how much more would you pay for it. Alot of people think that it is worth so much more but in reality if you are asking 50k more and I know it costs 25k do have the improvements done myself why would I pay double? Most likely I wouldn't and would pay no more than 25k more.

Answer 2

No outbuilding could add more than 10% to the value of the home - unless you could find at least three similar properties within two miles with similar outbuildings that sold within the previous year. So if it's a $200,000 home, the most an outbuilding could add is $20,000. Any single adjustment over 10% will make the appraisal unacceptable to investors.

Answer 3

Extra building would typically be given little value on an appraisal, unless they are somehow vital to the whole picture. Fences would add very little as well.