On this page, you will find past newsletters in which we describe some of the challenges we encounter as appraisers. Be sure to check this page often for updates, or subscribe to our newsletter for other kinds of helpful articles.

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by Mason Spurgeon, Certified General Real Estate Appraiser

September 2019

What is the first thing you think of when you hear the word, ‘mining’?  I immediately think of the many gold mining TV shows filmed in Alaska, but did you know there are mining operations right here in Missouri?  Well, in full disclosure, they aren’t gold mines but geode mines.  Some of the most colorful geodes in the world are found on properties in northeast Missouri.  

We were recently contracted to perform an appraisal on a property with a geode mining operation.  This really added to the difficulty of the project.  As you can imagine, there are limited sales of these types of properties, even in our market.  But at Spurgeon Appraisals, we bid every project and never shy away from a challenge.  Below I describe the steps I took to complete this unique project, along with my conclusion.

I began my research on this property by looking through our extensive database of sales data in the area.  I was able to locate one sale northeast of the subject property that sold on the market approximately 4 years ago.  After a careful analysis of the sale, I found no evidence of a premium paid for the property because of the geodes, even though both the buyer and the seller were aware of the geodes on the property.  The buyer even owned a geode shop and had been mining geodes from the property for several years.

appraiser for geode mine

My research also uncovered an MLS listing for another property with geodes in a different county in northeast Missouri.  I realize this property will produce a different type of geode because of the different minerals in the area, but it is a geode property none the less.  Again, after comparing this sale with other similar tracts in the area without geodes, there did not appear to be an adjustment for the presence of geodes. 

I then called several realtors, appraisers, and land traders/sellers in the area.  Through talking with each of them, I determined that they all had the same conclusion that the geodes on the property would be an added benefit for the buyer/seller, but they have no knowledge of someone willing to pay more for a tract because of the geodes

After visiting with each of the above market participants, I then called a local geode miner/seller.  He informed me that it is very difficult to know exactly how many geodes are remaining on the property and the value of the geodes.  The cost of excavating the geodes can be very expensive due to the need to use heavy machinery.  Also, one must clean, cut, and market the geodes after they are mined, and this can sometimes cost more than excavating them.

appraisal geode mine

My conclusion, after an extensive amount of research, is that the current owner can benefit from mining geodes on the property, but the revenue it generates will be entirely dependent on the owner’s management and negotiating skills, not the real estate itself, and the revenue has no guarantee of continuing if the property sells. Also, while finding a buyer that places value on the presence of geodes may not be impossible, it is just not likely in this market.

These were the steps I took to appraise a unique property in northeast Missouri.  This is the type of service and attention to detail you can expect from every appraisal you order from Spurgeon Appraisals.  We do our very best on every appraisal assignment and we don’t cut corners.  When you need an appraisal, hire the BEST. Call Spurgeon Appraisals – We can help!

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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by Mason Spurgeon, Certified General Real Estate Appraiser

October 2017

Appraisers are constantly asked, “Why are your fees so high?”  Appraisal fees always seem to be on the rise, but this is also the case for most goods and services.  Many of the reasons for changing fees and prices come down to government regulations and the ever-relevant concept of supply and demand.  Also, AMCs (appraisal management companies) play a huge role in the price increases.

Appraisal regulations have changed drastically over the past decade.  Residential appraisals for properties being sold in the secondary market now require more forms and more information.  Also, requirements have been added for UAD: Uniform Appraisal Dataset.  These requirements are intended to keep appraisers from changing the condition or quality of sales to meet what they need to make a deal work or hit a predetermined number.  These added requirements and regulations slow the appraiser down—and as we all know, time is money, and the consumer must pick up the tab.  

The next factor that dictates the price of a good or service is supply and demand, and appraisal services are no different.  Over the past decade, the requirements to become an appraiser have been made more rigorous, making it harder for new appraisers to become certified.  This has continually diminished the number of appraisers, because appraisers are retiring faster than they are being replaced.  According to the Appraisal Institute, almost 10,000 appraisers have been lost in the past five years (see chart below).  With fewer appraisers to complete the work, the fees are sure to rise.

farm appraiser northeast missouri

The last major factor to hit the consumer in the pocket book is the creation of AMCs.  The AMCs were created to help keep the loan officer from communicating and influencing the appraiser.  In theory, this sounds like a great idea, but all it did was place a middle man in the process who must be paid—and you guessed it, the consumer must pick up the tab again.  The amounts paid to the appraiser are only a fraction of what the consumer pays for the appraisal because the AMC takes their cut off the top. 
AMCs have become a thorn in the side of appraisers.  They continuously call appraisers asking for the lowest price and the quickest completion time, yet they typically have little information about the property, which can hinder the appraisal from the very beginning.  Then once the appraisal is complete, an email is generated to the appraiser from an automated checking system saying something about the report being incomplete or incorrect. The report is usually fine the way it is, but the automated system of the AMC cannot actually read the appraiser’s explanation for why he did what he did—and the appraiser still has to spend time explaining his report to the AMC. This, again, makes more work for the appraiser, requiring higher fees.

The overall theme is, “Time is Money,” and the more time an appraiser spends on a project, the more it will cost the consumer. Sometimes those higher costs have little to do with the property or customer, but are caused regulations, conditions in the appraisal industry, and the middle-men at the AMCs. In response, the consumer will naturally seek the cheapest appraiser possible. But if you choose a low-cost appraiser, the chances are you will get a low-quality appraisal.  A good appraiser does not sacrifice quality for quantity.  At Spurgeon Appraisals, you may not get the cheapest fee, but you will always get the best product and service available.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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by Staff Appraiser

September 2017

Recently, we’ve completed multiple appraisals of very large homes. Valuing homes that are more luxurious than those found in most neighborhoods can present quite a few challenges, so that many appraisers steer clear of these assignments. While our firm is always willing to accept such projects, they do present their unique complications.

Before we begin our comparable sales research for such an appraisal, we must determine what the market is for that exceptionally large home. If the home is in a very rural area, this can be difficult, as there may be no recent comparable sales in that entire county, perhaps not even in any adjoining counties. In that situation, we must look for sales in other areas that have similar proximity to employment centers, or use what sales we have and make adjustments for differences in these items.

custom home appraiser

Further complicating the process, 5,000-plus square-foot homes are custom built in most situations. That means that the people who commission these homes to be built usually plan to occupy them for the foreseeable future with no plans to sell them soon. Therefore, there are few sales of custom-built homes less than 10 years-old, and sales of brand new structures are nearly non-existent. I have seen them, but other factors often make them poor comparable sales: perhaps the home sold because the owner died or was divorced, or due to financial duress, or any of several other factors.

Finally, such large, custom-built homes commonly possess “unique features.” After all, it is human nature to want something unique, so I can’t fault homeowners for wanting to put their fingerprints on a custom residence. But it does complicate the valuation, especially when the feature is very rare or not commensurate to the quality of the rest of the home. Examples could include use of reclaimed lumber for finishes, incorporation of precious metals into fixtures or finishes, or items built into the structure because of their sentimental value to the owner. Some of the most interesting features that I’ve seen include a large, built-in, indoor pool; a home where the corners of the foundation had intentionally been rounded, poured by using single-use concrete forms custom designed for the application, topped with brick; and an owner who removed flooring from a previous structure and installed it in the new structure (citing sentimental reasons), even though the flooring was of much lower quality than the rest of the structure.

large home appraiser

Many residential appraisers will automatically accept any assignment brought to them. But if they arrive at the property, and it looks like a large home requiring them to spend more time on the appraisal, those appraisers call their clients and cancel. In fact, I recently completed an appraisal of a property where the owner told me that his lender had sent out three different appraisers during the past year, and each had looked at the home briefly before withdrawing from the assignment. This not only made those appraisers look bad, but as they had been hired by the lender, their inability to follow through on their commitments also reflected poorly on the lender.

But when you engage Spurgeon Appraisals to value a very large home, you are hiring an appraiser with the experience to complete the appraisal, and our experience and Copyright © 2017 Spurgeon Appraisals, All rights reserved. professional service will surpass your expectations.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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by Staff Appraiser

June 2016

Zoning ordinances are usually written by zoning commissions on behalf of counties or municipalities, based on a master plan for how they anticipate or want their community to grow. For example, a large, generally flat, open area with good interstate access at the edge of a community might be zoned industrial, as it could easily be developed into manufacturing or warehouse-type facilities. By contrast, an inside lot in a single-family subdivision would likely be classified in some sort of residential zone. The idea behind the concept of zoning is to keep like uses of properties in similar areas. For example, zoning regulations often prevent construction of a factory next to your home without some sort of buffer zone. In this way, zoning can protect property owners from adjacent land uses that could adversely affect the value of their own property.

appraisal for rezoning

When valuing a property, zoning is an important factor that must be considered. As appraisers, we are familiar with the zoning regulations in all of the communities that we work in, and have extensive knowledge of the regulations in place for each of the districts within those municipalities. This is important due to the differing criteria for zoning districts. Some communities call the residential district R-1, and allow 1-4 family dwellings with few restrictions, while R-1 in another community may only allow single-family residences and require a lot area of at least 20,000 square feet. Due to this differing criteria, an appraiser must give careful attention to zoning regulations. By contrast, we have seen other appraisers who merely note the district that the subject property lies in, without giving any description of the requirements for that district or any explanation of the zoning of comparable sales or explanation of any adjustments or lack thereof.

It is also worth noting that not all cities or counties actually have codified zoning ordinances—like Houston, Texas, the most well-known and largest US city without zoning. This occasional indifference to zoning is partially due to the problems it can cause. Many of the problems commonly associated with zoning come as decades pass from the original master plan that the zoning is based on. People’s desires change, and as such, the market tries to adapt, and zoning codes often become outdated.

real estate appraiser tristate area

In response to this problem, property can usually be re-zoned, or a “variance” may be obtained to construct a non-conforming structure. Because each municipality develops its own zoning code, each one is different, and obtaining a variance or approval for rezoning can be much easier or harder depending on the municipality and the procedures that must be followed. As such, re-zoning is often both a long and costly process that can take several years or more, or may be denied altogether.

If you are applying or considering applying for a change in zoning, an appraiser’s professional analysis can be a valuable tool to present to the zoning commission or city council. Spurgeon Appraisals can complete a market study, or do an appraisal to determine the change in market value that results from the change in zoning, or to determine the extent to which other neighboring properties might be affected. As always, we do not shy away from projects other appraisers are hesitant to accept.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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by Mason Spurgeon, Certified General Real Estate Appraiser

May 2016

The longer I work as an appraiser, the more I encounter properties which are “unique.” One such project involved a “hybrid septic system.” A hybrid septic system is very similar to a standard septic system, but instead of the liquid waste being dumped into a lagoon or leach fields, the waste is pumped into the city sewer system for removal. This setup is called a “hybrid” because it works in some ways like a standard septic system but also makes use of the city sewer.

Last year I was asked to appraise a newer home with a hybrid septic system. The subject had to be hooked to the city sewer system through a septic tank because the main sewer line running out of the home is located below the city sewer line, making disposal of the waste entirely to the city sewer line impossible. According to the recent buyer of the property, the sellers did not disclose that the property had a hybrid septic system. The system was functional, but the buyer felt he had been cheated during the sale. Due to impending litigation, we were contracted to perform a market study and determine whether or not there was a difference in value between the existing hybrid system and conventional systems. For me, this project was a valuable chance to gain new expertise with a very unusual kind of property.

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I took several steps to determine if an adjustment was needed for this type of system. I surveyed several appraisers from the area and throughout the state. The majority of them responded by saying that, as long as the septic system is operational and legal in the city, there would be no adjustment, at least not one that could be proven.

Next, I called several realtors in the area and described the issue. The majority of the realtors responded that, as long as the septic system was in working order and was legally installed, they do not think a hybrid septic system would affect the sale price of a property when compared to a similar property without the hybrid sewer system.

Finally, I completed an extensive search for properties in the area with hybrid septic systems. While searching for properties, I found several rural subdivisions located just outside of the city limits with similar hybrid septic systems. However, the water waste is dumped into a public septic system which is then pumped to a sand filter that is owned by the county or the private developer. Whether the system is publicly or privately owned, a monthly septic system fee is collected from the home owners. After locating these types of properties in the market, I began to compare them with other properties that are similar in utility, but are connected to the public sewer system without a septic tank. I found that no adjustment could be proven in the city's market area.

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As long as a property has a functioning and legal septic waste removal system, it appears that the market does not place any more value on one type versus another, even though a septic tank may have a little more maintenance as compared to a straight pipe to the city sewer system.

Our work as appraisers would be much easier if all properties were basically the same, or if we refused to appraise properties other than normal homes or vacant farms. But Spurgeon Appraisals has decided not to shy away from the challenges of a unique property. Whatever kind of property you need appraised, we will learn and grow as necessary to meet your appraisal needs.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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