Garage Apprasial

Started by Fred Butalla #18832, August 23, 2005, 01:41:47 PM

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Fred Butalla #18832

I am trying to build a 9 car addition onto my garage to store my Cadillacs (& Buicks & Chevys) but the apprasial in coming in at about 1/3 the cost of construction.  I am being told that a garage adds very little to a homes value.  Obviously, to us car collectors, this is not true.  Unfortunately, they are not viewing it from the needs of a car collector.  The appraiser says he has nothing to compare this to in order to determine a higher value.  Therefore, he looks at it as being no different than a typical garage to store junk in.  Other appraisers are giving me very similar answers.  Has anyone else run into a similar problem, and if so, how were you able to get the proper appraisal.

The bank has suggested buying an industrial condo, but that is much more expensive and less convienient.  Any help is greatly appreciated.

Tim Coy #11513

Hey Fred,

Must be rough you have the room for an additional 9-car garage. Where I live (Louisville, Colorado) I cant even add a one-car garage without going through a zoning variance hearing, and the guy at the city told me they rarely grant variances. I just gave up and rented a storage unit for my old car. They rent is likely cheaper but I know Im throwing money away.

Do you plan to do the construction work yourself? That would save you a ton of money and likely get your expenses a lot closer to the appraisal. Also, if you plan to live in the home a long time, youll recoup your investment over time as housing prices rise. And youll save all the money you would have to spend on a rental storage unit like I have. Sometimes additions dont pay for themselves except in self-satisfaction. Good luck!

Fred Butalla #18832

Hi Tim,
Actually, I have spent the past 2 years getting the variance and special use permit I need to do this.  The rent I have paid over the years would have covered half of the construction costs by now.  According to the bank, the cost is very reasonable for the structure I want to put up, but the apprasial is so low that I dont know if you could construct much of anything at that price.  Time on the permits is running out and Im getting rather frustrated.

Bruce Reynolds # 18992

Gday Fred,

I can understand your predicament.

The Assessor/Valuer is correct in his method of evaluating the value of a property having allowances for the situation, buildings, and the surrounding area.

It is highly unlikely that anyone is going to be purchasing your property, when it eventually comes up for sale, with such a large "Shed" unless they are actually after a shed that is quite possibly bigger than the house.   I know from experience.   It is quite possible that anyone who purchases your place may even remove the shed.   Yes, I know, but not everyone is like us "collectors", and some people hate big sheds.

For such a size, even though it is what you want, or need, the market becomes very restricted.

And, if the property is valued too high, there is the possibility that if you decide to sell, and the selling price is way under the stated value, then there is always the probability that law suits could follow to recoup the "percieved loss".

Having said all that, If you are only building the "shed" to make money in the end, then you are not a true collector or preserver of fine automobiles.   Bruce, shame on you, chastise yourself!!  oo ah ouch!   Sorry, had to bring myself back to reality.

Lastly, you should consider the shed as a means of protecting your moving investment, and a place to escape to if the need ever arrises.

The Tassie Devil(le),
60 CDV

P.S.   In Australia, every man has to have a shed.

Andrew 10642


I was a residential real estate appraiser about 20 years ago.  The standard appraised value is a market value based on what a typical buyer and seller would negotiate in an arms-length transaction.  The standard methods of determining value are by the cost approach (what it costs to build), the market approach (what could you sell it for) and the income approach (what is the income capable of being generated by the property)  For residential property, the market value approach is the most important.  Income approach is generally for commercial stuff, and the cost approach is considered the least accurate.  Why?  Because just because you build it, doesnt mean the typical buyer wants it.  Quite frankly, I cant believe the typical buyer would need/want more than a 4 car garage, even in a very wealthy area.  One way around this would be to design the space to serve as another use as well (barn, entertainment space, etc) but the reality is that features of this nature do not generate a $ to $ return.  The finance company doesnt care what you think, because you wont be the one buying it if you default on the note.

Im not a typical buyer, and think a 9 car garage is a great idea!!!!  Real Estate Agents in your area that sell upper level homes can tell you what it may add in value more accurately.  If you want to disprove the appraisers conclusion, you would have to find two similar homes, one with a normal 3 car garage, and the other with a garage over 5 cars, and isolate that value factor. In other words, adjust for size, quality, and other factors.  Really, I wouldnt bother, its impossible to prove.

Just remember that if I built a giant wooden elephant in my front yard that cost $10,000, it wouldnt add $10,000 in value for most people.  In fact, it might reduce the value of my property.  Cost never equals value.  By the way, the typical giant wooden elephant in Ohio is a swimming pool, which is capable of being used 3-4 months out of the year, creates massive liability, and results in increased insurance and utility costs.

Hope this explains your problem with the appraisals you are getting.  Remember that the appraisals purpose is to prove to a secondary mortgage market that their loan is backed by marketable property.

Bill Hedge CLC 14424

I am attorney and much of my work is working with real estate matters.  Both Bruce and Andrew made some very good observations.  

However, there may be a number of legal ways to possibly solve your problem.

Talk to your loan officer and see if the lending institution has a more creative/experienced/flexible appraiser that they could use.  Most lending institutions have at least two and many times many more on their list of approved appraisers. As was pointed out in the other posts, appraisers use "comparable sales" to determine market value.   This is not an exact science, so maybe the current appraiser has not been creative enough to find "comps".  It is not unusual for appraisers to come up with very different amounts for the fair market value of a property.  Additionally, it is not unheard of to have the loan officer to "suggest" to the appraiser what they think the market value of the building will be once built.  Additionally, you might have to visit a different lending institution that really wants your loan more.  This is an area in which you need to tread very carefully since you do not want to cross the line and commit fraud.  That would a federal crime.  I think that is all I need to say on that subject.  

Another alternative is to obtain a home equity loan of sufficient size and use that money to construct your garage.  This type of loan may actually have a less expensive interest rate than the type of loan you obtain using the barn as security for the loan.

A third possibility would be to refinance the house to obtain sufficient funds to construct your garage.

A fourth possibility would be to use other collateral for the loan such as your cars, etc.  

A fifth possibility would be to obtain an unsecured loan.  These last alternatives will be more costly in the sense that they have a higher rate of interest, but sometimes you gotta do what you gotta do.

A sixth possibility would be to find a friend who is looking for a good rate of return and have them loan you the money and secure the loan with a mortgage.  The interest rate that a lending institution is likely to charge you would probably look attractive to most investors since the loan would be secured by real estate and would probably be higher than they are currently receiving on their investments.

A seventh possibility would be some combination of the above.

I was fortunate because I happened to find an apartment building for sale less than a mile from my house that "just happened" to have a seven bay garage.  I rented out the apartment and let my tenants pay off my mortgage and provide me with a free garage.

There are probably an infinite number of variations of the above, but this should give you some thoughts on some of the possibilities.
Good luck.

John Tozer #7946


I agree with Andrew. It is time for you to look carefully at what it is you want to build.... and you dont want to build a 9 car garage.

You probably want to build a four car garage (the maximum you can probably get your appraiser to put any sort of decent value on) and a "five-car-sized-something-or-other-of-high-value". This can be a "Granny Flat" that just doesnt happen to have any internal walls (your Granny LIKES open plan living) but it does have a shower toilet basin (ANY 9 car garage.... or more specifically, anyone that can afford the 9 cars needs these) and it is perfectly designed for future conversion to a very neat little Granny Flat. (I think you call them sleep-outs).

Get yourself a good architect, get him to design the combo four car garage/Granny flat then send HIM/HER along to justify an extraordinary valuation with the appraiser..... they very rarely argue with the architect. Most of them will capitulate just to shut them up!

Regards and good luck,


JIM CLC # 15000

Fred, get a bid from "general steel", they should be able to match-up the sideing to your house. Also, the posts have some good ideas in them, like build it with "living areas in mind", to be completed if you decide to sale later-on.
Good Luck, Jim

Lars Kneller 8246

I would disagree.  You should build what space you think you need, and probably extra if you have enough property.  I originally built a 40 x 60 pole barn, then a 30 x 40 pole barn, and then a 40 x 30 ft addition to the original pole barn. They are all towards the back of my property and do not distract from the house and the rest of the property. I use all the space.  You should have enough doors so you dont have to move cars around to drive them.  I built my house and property for me, not future buyers.  The advantage of pole barns, is they are not too expensive, and they can be built to be attractive.  I did wait until I could pay cash for them, which avoided dealing with banks and their loan officers. A home equity loan is a good way to finance them too.

Brian Rachlin

I am in the process of building a fairly garage right now behind my house.  I did not need a variance even though I live in a suburban home development of single homes.  I am lucky because the development is 35 years old, and due to mature trees and shrubs, my neighbor on the side of the yard where the garage is going cant even see it.

I got creative, given the area I had to work with.  The building will be large enough to hold 6 cars.  It is 32 feet wide, and 36 feet deep, with 3 overhead doors, and a walk in door on the side.

The side walls are 10 feet high, with a peaked interior ceiling using engineered trusses for a clear span with no posts.

Basically its a 3 car, double depth garage.  The center bay will have a lift for working on my cars.

I feel that the construction cost (about $30,000 from a contractor/friend of mine) will add about $50.000 value right away.  I am running utilities from my basement to the garage for electric/phone/cable/internet, so this building could also be used for another purpose later on, like running a small business or a storage building for a contractor, plumber, electrician, etc.

The roofing and siding will match the main house, and I still have plenty of yard left.

I would suggest just getting a home equity line of credit, or fixed rate term loan to finance the garage.  Dont worry about what an appraiser thinks, but dont build anything ugly either.

Good luck,


Yann Saunders, 12588

Excerpt from my latest communication with EBay:


ATTENTION:  Colton, Investigations Team, eBay Trust & Safety:
Enough with the pre-printed responses.  Get me Pierre Omidyar on the line! [note: Omidyar is EBays founder]
Enough with EBays seller-biased Feedback scores.  The only reason this seller (APPARENTLY) has a high feedback score is because EBay includes his OWN positive feedback to his buyers.
OPEN YOUR EYES.  Here are the TRUE scores at August 27, 2005 :
Total positive in 15 months = 305763, minus self-allotted positives (297736) = 8027
Total positive in 10 months = 53039, minus self-allotted positives (52568) = 471
Overall total = 358802, minus self-allotted (350304) = 8498
In just the last 12 months, these sellers got a total of 4419 negatives.  By my calculation, therefore, their combined feedback score is 52percent, NOT 97percent+

EBays "biased" calculation of feedback score obviously is intended to help keep such dishonest sellers "on the books", because their combined sales totalling more than 350,000 items generates a comfortable level of revenue for EBay in commissions).

Kevin Bielinski

I didnt read the whole post but I can tell you this. I live in NYC. Yes, having a garage does ad value to your home. I dont have one at all and have to park my car approx 1/4 of a mile away every evening when I get home from work. My neighborhood is currently a hot area becasue our houses can be converted into legal 4 family units. Therefore, becasue of the overcrowding condition, a garage will add approx $150,000 to the value of your house in Brooklyn, New York.

Doug Houston

In the mid seventies, I needed to have a place to keep the cars. I had all the cars I now have  (10 of them)), and so I bought 2 1/2 acres of dirt in the country, ans built a ranch type house with a 10 car garage on the lower level, with a conventional 3 stall garage wing on the house. There was no way I could find a place and add on a garage that I needed, so I had to just go ahead and build the place. My 56 Cadillac convertible came along afterward, and its presently in storage. Id post a picture of the place here, but I dont know how. Its been pretty good for storage of the cars. At least, theyre outside of Detroit now, and that alone is a relief.

Brad Hemingson

How big is your property and is it in a rural area? Where I live a friend got around the zoning issue by building a "barn" which was an allowed use in an area of small acreages that was for the snotty horse set. Also if you have enough acres you might get to write the "barn" off as a farming expense.

Fred Butalla

I have about 1.33 acres in the woods.  It is zoned residential so a barn probably would not work.  Besides, I do have the zoning approval, its just that the bank sees no value in it.  They appraised it for what it would cost to build a deck!  It doesnt get much lower than that.  I understand that the average person is not going to want it.  However, for the car collector or wood worker, they are not going to pass it up and wait for something else to come along because they know they wont find it.  However, it is NOT my intention to sell anytime in the foreseeable future.

Scott Howard #22304

WOW 9 cars!!  Awesome. We all look at the space we need, 9 cars, ok they are parked, then you need space to work. As we all know figure out much space you need then add at least 15percent because we always need more.
You did not say what kind of cars you have.  You could possible cut down on initial space by building UP.  How about storing your cars on lifts stacking them.  This allows your structure to become a smaller initial footprint. You can still design it to get them out easily and allow for work space. Just an idea.  Also buy the book "Ultimate Garages" by Phil Berg. Some of these garages are rather well designed & camoflouged with the additional possibilty of easily changing their usage for a future owner.  
My usual way is to build stealthily and ask forgivness later, if it comes up.  They sure wont make you tear it down if it is built to code.  Well they can but it is tough.   Scott.

Rusty Shepherd CLC 6397

Heres something you ought to check: insurance.  I dont know if this applies to other states, but in Texas any building on your property detatched from your house is only covered for 10percent of the total value of your policy unless you have a separate rider included in it.  I didnt know this until I had a fire in my garage (electrical problem)in 1999 which almost destroyed it. Fortunately neither car was in it at the time, but its a large garage with laundry room and bathroom and the 10percent only covered 1/3 of the cost of rebuilding it. My argument that if the garage had been connected to the house, the house would have burned down and then I would have been fully covered fell on deaf ears.

Andrew 10642

My State Farm Insurance covers all detached structures (in my case a 22x24 insulated heated and a/c garage with car lift plus a 12x14 summer kitchen) at 15percent of the home insurance value.  In my case,  thats way too low, as my primary home is a 100 year old brick cottage of only 1000 sq ft, so it is insured for only $168,000 (reconstruction cost)  I had to attach a rider to the policy to verify coverage of $30,000 for all detached structures, which is probably still too low.

Another insurance pitfall is that if you have underinsured your home (100,000 rebuild cost insured for only 50,000 for example), you will only receive a portion of your proven losses.  In the 50/100K example, an actual loss of 40,000 might result in a payment of only $20,000, becasue the insurance company would argue the property was underinsured by 50percent, so coverage is only effective by that amount.  One way to avoid this problem is to have an "agreed value" policy.