Rural Property Appraisal
systematic process of clarifying and evaluating the characteristics of rural property in order to make a well-reasoned judgement of its value.
Appraisal
an assessment or estimation of the worth, value, or quality of a person or thing
What are the three approaches to appraisal
Cost
Income
Market
USPAP
Uniform Standards of Professional Appraisal Practice
ASFMRA
American Society of Farm Managers & Rural Appraisers
ARA
Accredited Rural Appraiser
Market Value
the prices in terms of cash or its equivalent at which a willing buyer and a willing seller will agree upon, where neither is under and undue pressure and both are typically motivated, have adequate knowledge and are acting in their own best interest
Arm's Length Transaction
A contractual transaction negotiated between two or more unrelated parties who are knowledgeable under no undue pressure and capable in the context of the local market.
Assessed Value
An estimate of value based on the appraiser's analysis of data within the context of the appraisal problem that the appraiser was hired to solve.
Capitalization Rate
a rate used to convert an income stream into a lump-sum capital value. The periodic income is divided by the cap rate to estimate the capital value of the income stream
Fee Simple
ownership is the most complete estate a person can hold in land, and it attaches no conditions on possession or use or transfer and endures without limit so long as the use is not illegal. Highest quantum of ownership that is recognized by law.
Joint Tenancy
two or more persons own an undivided share in property, but each has rights of survivorship as opposed to heir of the owner who dies
Tenancy in common
property is held by two or more persons each of whom owns an undivided share in the property. Each party could sell his or her undivided share in the property.
Eminent domain
the right of a federal, state and local government or its local government or its agent to expropriate private property for public use�ex. Public roads, schools or other facilities.
ETUX
and wife
ETVIR
and husband
LE
life estate
TR
small tract
Who are the 2 founding fathers of land Econ?
David Ricardo and Von Thunen
What are David Ricardo's key insights
-price is determined by the supply and demand in the market place
-land that has the lowest production cost has the highest rents
-land that has cost>revenue has a rent at $0
What did Von Thunen believe?
the greater the distance to market, the higher the transport cost that had to be added to the cost of producing a crop or commodity
Data Sources for comparable sales:
Iowa assessors
Farmland Finder
Auction results: hertz, peoples company, farmers national, etc
I think??? idk???
how many acres are in a section?
640
how many acres are in a 1/4 of a section
160
how many acres are in this description:
S 1/2 NE 1/4 SE 1/4 T98N R3W 5th PM
20
What states do NOT use the public land survey (PLSS)
Maine, Vermont, West Virginia, Kentucky, Tennessee, Texas
How do you calculate CSR2?
((CSR2 of soil1
acres of soil1)+(CSR2 of soil2
acres of soil2)+.......+)/# of acres
What does Illinois use instead of CSR2
Productivity Index (PI)
What does Minnesota use instead of CSR2?
Crop Productivity Index (CPI)
NCCPI
National Commodity Crop Productivity Index
What are the key characteristics to look for in auctions and comparable sales searches?
-similar acre number
-similar geographic area
-date of sale
-topography
-tillable vs non-tillable
-drainage
-timber
-pasture
-improvement/buildings
How agricultural land and buildings are assessed by county assessors, be able to explain why the assessed value for ag real estate is much lower than market value
???
What are the four things looked at in highest and best use?
Legal:
Physically Possible:
Financially Feasible:
Maximally Productive:
What does the legal mean in highest and best use?
An appraiser must always determine which uses of a property are legally permissible.
factors like:
deed restrictions, zoning, building codes, historic districts, environmental restrictions
What does the physically possible mean in highest and best use?
this test uses the physical characteristics of the site and how these characteristics may affect the highest and best use of the property.
factors:
size, shape, topography, drainage/flood plain, soils, road frontage/access, location, utilities
What does the financially feasible mean in highest and best use?
after considering the legally permissible uses and the physically possible uses of the property, only those potential uses that meet the first 2 criteria are analyzed further. All legal and physically possible uses are tested to determine which uses will
What does the maximally productive mean in highest and best use?
this test addresses not only the value created, but also the costs, if any, to achieve the value.
How do you convert a sale price from X months ago to the current price?
FV= PV(1+percent change)
what are the four government rights?
Levy
Eminent domain
Police power
Escheat