Stately new home with attached red barndominium which has been converted into a separate mother-in-law living space

5 Rules for Appraising Barndominiums


Barndominium properties are typically found in more rural areas. They could be existing barns that were converted into homes or brand-new metal pole buildings that are finished to create a residence. During the appraisal and appraisal report review processes, barndominiums require special consideration, given that they are typically unique to a subject neighborhood. Bottom line: If the home is going to be financed by a lender, insured by FHA, or sold on the secondary market, you must make sure you compile a fair, thorough report to ensure that the lender doesn’t take a loss. These appraisals take more time and effort, therefore you should charge more for them. Here are five guidelines to follow when appraising barndominiums.

1. Consider each barndominium on a case-by-case basis

Both you and the underwriter must independently determine whether there is sufficient information available to develop a reliable opinion of market value for each individual property. That will depend on the extent of the differences between the barndominium and the more traditional types of houses in the neighborhood. It will also depend on the number of such properties that have already been sold in the neighborhood.

2. Assess the perceived value by buyers

When appraising a barndominium, don’t assume buyers will be willing to pay more than—or as much as—they would pay for a more traditional property. Given the location, will people be willing to pay more for the home because of the advantages it offers? For example, because the home is cheaper to build or because they place a premium on an open- concept living space? Is it functional, and do the advantages outweigh the disadvantages? You must recognize obsolescence, and specifically whether the maintenance of the home will make it undesirable.

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3. Dig deep for comparables

It is not necessary for one or more of the comparable sales to be of the same design and appeal as the property you are appraising. However, you’ll improve your appraisal accuracy if you use comparable sales that are the most similar to the barndominium.

Since the property could be the only barndominium in a neighborhood—or town even—you will need to expand your search. Go back further than 6 months and out of area to find comps. You may need to go to another neighborhood or town or state. Just be sure to state in your report that you found the comps in another market and note whether that market is a competing, superior, or inferior one.

4. Be consistent

When appraising barndominiums, choose comparables of similar size to the subject property. Additionally, you must be consistent when you calculate and report the finished square feet of gross living area. For example, if you are comparing a barndominium with a workshop on the lower floor to a more traditional home, you would compare the finished living space of the barndominium to the traditional home, not the square footage of the entire barndominium.

5. Compare improvements to those in the neighborhood

Any improvements should conform to the neighborhood in terms of age, type, design, and materials used for their construction. If there is market resistance to a barndominium property because its improvements are not compatible with the neighborhood or with the requirements of the competitive market because of adequacy of plumbing, heating, or electrical services; design; quality; size; condition; or any other reason directly related to market demand, address the impact to the value and marketability of the subject property.

Learn more about appraising barndominiums and other types of oddball properties in our top-rated CE course, Complex Properties: The Odd Side of Appraisal.