I'm representing the buyer here and trying to hammer out this deal. I need some advice. The appraisal came in lower than the asking price. Seller says it's because the appraisal doesn't include a well and the 2 water shares that are being included.

The 2 water shares are personal property so I'm thinking they will not appear on an appraisal. They are valued at $4,000 each by the city.

The seller says the well is worth $9,000 and was not taken into consideration on the appraisal. So seller thinks his house is worth $17k more than the appraisal & won't budge on his price.

Any thoughts on this? Should the water shares be sold separately to get our asking price inline w/ the appraisal? What about the well? Isn't that just part of the house? Is it real property or personal? Should it be considered separately?

TIA!

What comps did the appraiser use? Did those comps have a well and water shares included?

This is how it is in Colorado:
A well is NOT personal property.
Water shares "run with the land" and are transferred by deed at the time of sale. Not all land has water shares, but if you own land with water shares it is your right to use the water alloted to the land, until such time that you sell the land, and then the water rights are sold with the land.

Thanks for the info! I appreciate you both posting!

Same here in california, a well is not classified as personal property.

In fact, if we are all using the same definition of personal property, this would have to apply to all states. Private property can be easily removed from the property. It all depends on how it is "attached" to the property if at all.


R

Misread the posting, I will try this again.

The water shares being personal property do not effect the appraised value of the property at all.

The appraiser would have already factored in the value of the well in the appraisal. Read the appraisal report and I am sure there will be mention of the well under utilities and make sure the comp properties also had wells.

Is the well a new well that was recently drilled by the sellers who feel they should be able to fully recoup the cost of the well?
Sounds like the sellers just feel their property is worth more than it appraised for!

The value of a well is usually factored in under the "site value" in the cost approach section of an appraisal. Sometimes each improvement is specified a (well, septic, land value, etc), but sometimes not. If that is already factored in, then the seller needs to just realize they have a higher opinion of their property than the lender will, and decide whether they really want to sell it. Personal property that's included in the sale is usually noted on the offer, but in this case, you might want to separate the water shares (not sure what that means) from the real estate contract, which should bring sale price closer to appraised value and buyers may be able to get financed. let us know how you work it out...

Here are a couple of articles about water rights and water shares in Utah.
http://www.uswaternews.com/archives/arcpolicy/4utahbill3.html

http://www.vancott.com/resources/waterrights.html