Table of Contents
A. Data Documentation and Appraisal Reporting Standards
Part II Factual Data Before Acquisition 27
A-11. Legal Description. This description shall be complete as to properly identify the property appraised. If lengthy, it should be referenced and included in the addenda of the report. If the client agency has assigned a parcel, or tract, number to the property, that should also be referenced. A more detailed standard concerning the legal description of the property to be appraised appears in Section D-5 of these Standards.
A-12. Area, City, and Neighborhood Data. This data (mostly social and economic) must be kept to an absolute minimum and should only include such information that directly affects the appraised property, together with the appraiser's conclusions as to significant trends. The use of "boilerplate" or demographic and economic data (often downloaded from the Internet) is unnecessary and, unless the appraiser demonstrates that the specific data directly impacts the current market value of the subject property, it should be excluded.
Changes in the neighborhood, brought about by the government's project for which the property under appraisal is being acquired, shall be disregarded. This specific standard is contrary to USPAP Standards Rule 1-4( f) and is considered a jurisdictional exception. See Section B-10, "Enhancement or Diminution in Value Due to the Project," for a discussion of the legal basis for this specific standard.
A-13. Property Data:
A-13a. Site. Describe the present use, accessibility and road frontage, land contours and elevations, soils, vegetation (including timber), views, land area, land shape, utilities, mineral deposits, water rights associated with the property, easements, etc. A statement must be made concerning the existence or nonexistence of commercially valuable mineral deposits. 28 Also discuss the beneficial and detrimental factors inherent in the location of the property. The presence of hazardous substances should be considered by appraisers in accor-dance with Sections D-3 and D-4 of these Standards. An affirmative statement is required if the property is located within a flood hazard area. 29
A-13b. Improvements. Describe the following: all improvements including their dimensions; square foot measurements, chronological and effective age, dates of any significant remodeling/ renovation; condition; type and quality of construction; and present use and occupancy. This description may be in narrative or schedule form. Where appropriate, a statement of the method of measurement used in determining rentable areas such as full floor, multi-tenancy, etc. should be included. All site improvements, including fencing, landscaping, paving, irrigation systems, domestic and private water systems, require description.The appraiser should coordinate such description with the photographs of the property included in the report 30 and with the plot plan 31 (and floor plan, if included 32 ) in the report. In those instances in which the appraiser will rely on the cost approach to value, 33 or in the case of a partial acquisition that will structurally impact the improvements, a more comprehensive improvement description is required.
A-13c. Fixtures. Fixtures are to be described in narrative or schedule report form that includes all fixtures, with a statement of the type and purpose of each. The current physical condition, relative utility, and obsolescence should be stated for each item or group included in the appraisal, and whenever applicable, the repair or replacement requirements to bring the fixture to a usable condition.
Questions regarding whether an item is, as a matter of law, a fixture (real estate) or equipment (personalty) shall be referred to the agency legal counsel for clarification. In making this referral, appraisers should bear in mind that the determination of whether an item is a fixture or equipment, for federal land acquisition purposes, may or may not be consistent with laws of the state in which the property is located. 34
In those instances where specialty fixtures are encountered, or when the fixtures will represent a substantial portion of the property's value, consideration should be given to the retention of a fixture valuation specialist. 35
A-13d. Use History. State briefly the purpose for which the improvements were designed and the dates of original construction and major renovations, additions, and/ or conversions. Include a ten-year history of the use and occupancy of the property. 36 If any of the forgoing information is indeterminable, the appraiser must report that fact.
A-13e. Sales History. Include a ten-year record of all sales and, if the information is available, any offers to buy or sell the property under appraisal. If no sale of the property has occurred in the past ten years, the appraiser shall report the last sale of the property, irrespective of date.
Information to be reported shall include name of the seller, name of the buyer, date of sale, price, terms and conditions of sale, 37 and the appraiser's opinion as to whether the sale price represented market value at the time, and, if not, the reasons for the appraiser's conclusion. An unsupported statement that the sale did not represent market value, or was not an arms-length transaction, is unacceptable.
It is recognized that the ten-year sales history required by this standard is longer than many other appraisal standards require. 38 The legal basis and reasoning for this extended sales history is discussed in Section B-5 of these Standards.
A-13f. Rental History. Report the historical rental or lease history of the property for at least the past three years, if this information can be ascertained. All current leases should be reported, including the date of the lease, name of the tenant, rental amount, term of the lease, parties responsible for property expenses, and other pertinent lease provisions. The appraiser shall state his or her opinion as to whether any existing lease of the property represents the property's current market or economic rent, and, if not, the reasons for the appraiser's conclusion. An unsupported statement that the rent does not represent market or economic rent is unacceptable.
A-13g. Assessed Value and Annual Tax Load. Include the current assessment and dollar amount of real estate taxes. If assessed value is statutorily a percentage of market value, state the percentage. If the property is not assessed or taxed, the appraiser should estimate the assessment, state the tax rate, and estimate the dollar amount of tax.
Some jurisdictions have developed programs wherein property will be assessed based on its current use rather than its highest and best use. These programs often relate to farm lands, timber lands, and open space; for purposes of eligibility, owners may have to agree to leave the property in its existing use for a certain period of time. 39 In such a case, the appraiser should report both the current assessed value and taxes for the property's existing use and the estimated assessed value and tax load for the property at its highest and best use.
A-13h. Zoning and Other Land Use Regulations. Identify the zoning for the subject property. This must be reported in descriptive terms (e. g., multiple family residential, 5000 sq. ft. of land per unit) rather than by zoning code (e. g., MF-2). Other local land use regulations, such as set-back requirements, off-street parking requirements, and open space requirements, which have an impact on the highest and best use and value of the property are to be reported. The appraiser should also note any master, or comprehensive, land use plan in existence that may affect the utility or value of the property.
If the property was recently rezoned, that must be reported. The appraiser shall determine whether such rezoning was a result of the government's project for which the subject property is being acquired. If so, the appraiser must justify his or her conclusion in this respect and disregard the rezoning. 40 If the rezoning of the property is imminent or probable, discuss in detail the investigation and analysis that led to that conclusion under Section A-14 (Analysis of Highest and Best Use). 41 The mere assertion by an appraiser that a property could be rezoned is insufficient. 42
In addition to zoning, the appraiser should identify all other land use and environmental regulations that have an impact on the highest and best use and value of the property. 43 The impact of the regulations must also be discussed under Section A-14. The appraiser should also discuss the impact of any private restrictions on the property, such as deed and/ or plat restrictions.
27. If the government's acquisition is a partial acquisition, it is imperative that the sections of the appraisal report in Part II relate only to the before situation. The appraiser should not attempt to combine the discussion of the factual data after the acquisition with the factual data relating to the before situation.
28. Beneficial factors may include such items as desirable views, proximity to desirable public or cultural facilities, or proximity to dedicated open space or green belts. Detrimental factors may include such items as offensive odors, undesirable land uses, contamination, and noxious weeds. Farm properties can be especially impacted by natural environmental factors such as noxious weeds, frost, incidence of hail, floods and droughts, and variations in crop yields. Appraisers should list and describe those beneficial and detrimental factors that may impact the utility and value of the land.
29. For this purpose, appraisers should refer to Federal Emergency Management Administration (FEMA) flood hazard map
30. See Section A-6.
31. See Section A-35.
32. See Section A-36.
33. See Section A-16; B-6.
34. See Section B-1.
35. See Section D-4.
36. Past uses of the property may suggest its historical contamination by hazardous substances. See Section D-3.
37. Terms and conditions of sale cannot, of course, conclusively be determined from the public record. Therefore, appraisers should confirm the sales of the subject property with one of the parties to the transaction.
38. E. g., USPAP requires a one-year sales history for a one to four unit residential property and a three year sales history for other property types; 49 C. F. R. 24.103 requires the reporting of a five year sale history.
39. Many of these programs provide that an owner who converts his or her land from the existing use early must pay back taxes for a certain period of years based on the value of the property for its highest and best use, plus a substantial penalty. These back taxes and penalties become an encumbrance on the land when it is converted to an alternate use. However, since appraisers should estimate the market value of property as if free and clear, the indebtedness, or potential indebtedness, imposed under these programs is not to be considered by the appraiser in estimating the property's market value.
40. For the legal basis for this standard, see Section B-10. Under USPAP, invocation of this standard would result in an appraisal prepared under a hypothetical condition.
41. For a discussion of the extent of the required investigation which must be taken by the appraiser in this regard, see Section D-6.
42. See Section D-6; Section B-23.
43. Ibid.
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