Pond Boss Forums Thread Like Summary - Does a pond add property value?

I ran across this post "12 acre lake 1 1/2 NE of Dallas for sale $110k" I decided to open up the conversation again about weather or not a pond adds to the value of property. There were some interesting view points about the subject in this old post. This might make a good article for Bob to cover in PB. I would like to share from my on experiences on this subject and get feed back from others. I realize all us pond meisters that bought raw land and built our on pond masterpieces are bias about this subject because we live and breath the stuff. Lets here from Pond Bosses out there that purchased land with an existing pond. Did you buy the property because it had the pond? The original post discussed that the appraised value of property is the same weather it has a pond or not. This for the most part is a true statement. Bankers & official appraisers don't add much if any value for having a pond when it comes to them setting the value. I ran across this when I built my pond and home. The appraisers use the Fanny May rule which is nothing more than determining value based on what has sold in the area in recent time period. Another words if you move somewhere and build a mansion and a 10 acre lake and there is not any thing in the area that the appraiser can compare to then you will most likely get a reduced appraisal value. I know this because I went thru it building our place. I build a 21/2 story cedar home rap around porches metal roof 30 foot ceilings setting on 22 acres with a 1.5 acre pond in the back yard. I designed and built 99% of the home myself. The only cost I had in the property was mostly materials. When it came time to close I was 20 k upside down based on the appraisal value. The property was compared against same square foot homes on 1& 2 acre tracts. These houses where all just brick tract homes. I protested of course and hired another appraiser. During the time the first appraisal was done and the second, a 10 acre tract with a very small cedar cabin metal roof sold for a good price about 10 miles away. Over night my property value went from being 20k in the hole to having more than 45 % equity in the property. So from a bankers stand point it's not what the property has more what are the masses willing to pay for a given property in the area. The bottom line is the value of a pond or land is what ever someone is willing to pay for it. If nothing else a pond adds a lot of curb appeal when it comes time to sale. As the original post points out just drive down any back road in rural America , if a property has a nice pond, the house 9 times out of 10 is built near by. What are YA's thoughts on this subject.

I'm a builder and have had some success buying and selling raw land. Without trying to offend anybody, I can tell you that an apraiser works for the person that hires him/her. Their job is to get the amount their employer asks for.

The big descrepancies seem to come from the appraisers who work for the bigger firms.

A bank will have several appraiser they use for their loans. If they want to make the loan, they can get the appraiser to justify the ammount.

The bigger real estate agents also have certain appraisers that they use all the time. They can also get the numbers to reflect the amount they require.

As a small builder, I've been on both the good and bad end of this. I've had a buyer's agent bring in their appraiser to run down the value of the property I'm selling. I contacted my banker and had him get "his" appraiser to give me one that reflects my selling price.

Comparing the two apprasals can be quite interesting. Ponds and Lakes vary allot depending on the angle the appraiser is shooting for. Some call them liabilities or deduct the value based on the work required to "fix it up." Others will increase the overall price of all the acerage based on this one feature.

Just my 2 cents. I don't mean to imply all appraisers are so easily swayed.

Eddie

I have a couple of stories on this topic. Two years ago, a client called, was looking at a property about 40 miles east of Dallas. It was advertised as 40 acres, with a pristine lake. He looked, was interested, but wanted to do more due diligence. He hired me, I met the realtor, evaluated the lake. The lake covered about 15 acres, was 60% covered with American lotus. Eight acres of water was less than 4 feet deep, loaded with coontail. The fishery was okay, but mostly stunted bass and a fairly healthy bluegill population hiding in abundant plant growth. The lake needed work, especially due to the shallowness, which was mainly two to four feet of blackland silt. My best estimate was that it would cost $35-50,000 to renovate this lake to make it like he wanted. He chose not to buy it. Last I heard, a group of duck hunters were looking, and loved it. So, it wasn't worth much to the bass fisherman, but the duck hunters may have found exactly what they wanted.
In 1985 a prominent family in Fort Worth, Texas, built a 50 acre lake on their 1660 acre ranch southwest of town. Spent more than $200,000 on the dam. I have the privilege to stock and manage it for 8 year, until the owner died. His widow kept the place for three more years, but it was more than she could care for. She asked the local bank to appraise it, along with two local realtors. They looked at comparable land sold in the area, and suggested her land, at that time, would sell for $800-850 an acre. She, and her advisors, believed the lake increased the value dramatically. She ran an ad in the Wall Street Journal, New York Times, as well as the big cities in Texas. Three people 'fought' for the land, and she ended up selling it for $1,600 and acre. Do the math...all three wanted to buy it for the 50 acre lake. Her savvy parlayed an 'extra' 1.2 million for her.

Lots of decent information and lots of misinformation on appraisers and appraisals on here. I know a little bit about the subject since it's been my occupation for 23 years.

There are lots of appraisers who can easily be swayed to get to their client's numbers. And yes, too often, if he can't get there, he won't get much work. But some people tend to think that all or most appraisers are somewhat crooked. And it's simply not so. And no, most of the people who went to prison over the S&L bailout of the '80s were NOT appraisers. Most were "developers" and land speculators who sought out naive or dishonest appraisers to help them get the loans. More bankers went to jail than appraisers. In Texas, where the crisis essentially started and was most prominent, I think only 2 appraisers actually served jail time. But I could be wrong. Several did give up their appraisal designations and licenses, and gave testimony in lieu of prosecution.

Ponds and lakes usually add some value, if they are in good shape and offer aesthetic appeal to a residential property, or a needed water supply to an agricultural property. But seldom does the additional value come close to the actual cost of building it in the first place. Muddy, shallow ponds that have been poorly built or managed offer little or no value. Of course, it's up to the appraiser to pull any adjustment he makes from the local real estate market. That's the difficult thing to do. A sale or listing may state that the property has a beautiful 5 acre lake, when in reality it's a 5 acre mudpit that is only 2 feet deep in the middle. And it's usually not easy to get the real scoop on that lake, how much money would be required to rehab it if necessary, etc.. So extracting additional value attributable to the lake is sometimes very difficult. But a competent appraiser should do his best to try to make an accurate adjustment for the lake or pond based upon the local market.