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Property Attributes: Land & Building Elements
Property Attributes: Land & Building Elements
This chapter provides a detailed analysis of property attributes, focusing on land and building elements. Understanding these attributes is crucial for accurate real estate appraisal. We will explore scientific theories and principles underpinning these elements, along with practical applications and relevant formulas.
Land Attributes
Soil Characteristics
Soil composition directly impacts land use, especially for agricultural or resource lands. Precise soil surveys are vital for determining land suitability and productivity.
Soil Texture and Structure: Soil texture refers to the proportion of sand, silt, and clay particles. Soil structure describes how these particles are arranged. These characteristics influence water infiltration, aeration, and root penetration.
Soil texture classification:
Sandy soils: >70% sand.
Silty soils: >80% silt.
Clayey soils: >40% clay.
Loamy soils: Mixture of sand, silt, and clay.
Relevant Scientific Principles: Soil science principles govern the interaction of mineral components, organic matter, water, and air within the soil profile. Darcy’s Law describes water flow through porous media, including soil:
Q = -K * A * (dh/dl)
Where:
Q = volumetric flow rate of water (m3/s)
K = hydraulic conductivity of the soil (m/s)
A = cross-sectional area of flow (m2)
dh/dl = hydraulic gradient (dimensionless)
Practical Application: Agricultural land appraisal benefits from understanding soil nutrient levels. Nutrient deficiencies can be corrected through fertilization, affecting crop yields and land value.
Experiment: Conduct a simple soil texture analysis using the “soil ribbon test” or hydrometer method to determine the relative proportions of sand, silt, and clay in a soil sample.
Water Rights, Drainage, and Irrigation
Legal rights to water resources are critical for land valuation, particularly in arid and semi-arid regions. Appurtenant water rights are tied to the land, while transferable rights can be sold separately.
Drainage: Proper drainage prevents waterlogging, which can damage crops and infrastructure.
Irrigation: Supplemental water supply to support crop growth during dry periods.
Relevant Scientific Principles: Hydrology principles govern the water cycle and the availability of water resources. The concept of evapotranspiration (ET) is essential in irrigation management:
ET = E + T
Where:
ET = evapotranspiration (mm/day)
E = evaporation from soil surface (mm/day)
T = transpiration from plants (mm/day)
Practical Application: Assessing the cost and reliability of water sources is crucial. Consider water rights documentation, pumping costs, and potential water scarcity issues.
Experiment: Measure the infiltration rate of water in different soil types using an infiltrometer. This provides insights into the drainage capacity of the land.
Climate and Microclimates
Climatic conditions, including temperature, rainfall, and growing season length, significantly affect crop production and land value. Microclimates within a local area can create variations in productivity.
Growing Degree Days (GDD): A measure of heat accumulation used to predict plant development.
GDD = Σ (Tmean - Tbase)
Where:
Tmean = average daily temperature (°C)
Tbase = base temperature for plant growth (°C)
Σ = summation over the growing season
Relevant Scientific Principles: Atmospheric science principles determine weather patterns and climate variability. Understanding factors like latitude, altitude, and proximity to water bodies is crucial for assessing climatic influences.
Practical Application: Identify crops suitable for the specific climate and microclimate conditions. Consider the impact of climate change on long-term land productivity.
Experiment: Monitor temperature and humidity variations across different locations within a property to identify microclimates. Use data loggers to record data over extended periods.
Potential Crops and Environmental Controls
Crop selection is influenced by climate, soil, irrigation, labor availability, transportation, and market access. Environmental regulations also impact cropping patterns.
Relevant Scientific Principles: Ecology principles govern the interactions between organisms and their environment. Understanding the impact of pesticides, herbicides, and fertilizers on soil and water quality is crucial for sustainable land management.
Practical Application: Evaluate the impact of environmental regulations on farming practices and land value. Consider the cost of compliance and potential liabilities associated with contamination.
Experiment: Analyze soil samples for pesticide residues or fertilizer runoff to assess the environmental impact of agricultural practices.
Mineral Rights
The presence of subsurface minerals (precious metals, oil, gas, sand, gravel) can substantially affect land value. Mineral rights can be granted with or without surface entry.
Relevant Scientific Principles: Geology and mining engineering principles govern the exploration, extraction, and valuation of mineral resources. Reserve estimation techniques are used to quantify mineral deposits.
Practical Application: Assess the value of mineral rights based on geological surveys, drilling data, and market prices for minerals. Consider the risks and uncertainties associated with mineral extraction.
Experiment: Conduct a geological survey of a property to identify potential mineral deposits. Consult with a geologist or mining engineer for a professional assessment.
Unapparent Environmental Hazards
Hidden environmental liabilities (e.g., cattle vats, underground storage tanks, pesticide accumulation, old railroad beds) can significantly impact land value.
Relevant Scientific Principles: Environmental science and toxicology principles govern the behavior and impact of pollutants on human health and the environment.
Practical Application: Conduct environmental site assessments to identify potential contamination. Consider the cost of remediation and potential legal liabilities.
Experiment: Collect soil and water samples from suspected contaminated areas and analyze them for pollutants.
Building Elements
Architectural Style and Functional Utility
Architectural style reflects the building’s form and ornamentation, while functional utility is its ability to perform its intended function according to current market standards.
Relevant Concepts:
Form follows function: A design principle where the shape of a building should primarily be based upon its intended function or purpose.
Marketability: The ease with which a property can be sold or leased, influenced by its style and utility.
Building Description
The building description encompasses various aspects, including type of use, codes, size, plan, construction materials, and mechanical systems.
Building Classification: Buildings can be classified based on their intended use (residential, commercial, industrial), construction type (wood frame, masonry, steel frame), and quality (low, average, high).
Building Size: Measured in gross building area (GBA) or net leasable area (NLA).
Construction Materials: Types of materials used in the building’s structural components, exterior finishes, and interior finishes.
Site Visit and Inspection
A thorough site visit is essential for gathering information about the building’s characteristics and identifying potential problems.
Importance of Site Inspection:
Identification of defects and deficiencies that can affect property value.
Comparison of the subject property with comparable properties in the market.
Estimation of building costs for the cost approach to valuation.
Elements of a Building Description
Type of Use: The building’s intended purpose (e.g., residential, commercial, industrial).
Codes and Regulations: Building codes, zoning ordinances, and other regulations that affect the building’s use and construction.
Building Size, Plan, and Construction: The building’s dimensions, layout, and structural system.
Exterior and Interior Details: Materials, finishes, and features of the building’s exterior and interior spaces.
Equipment and Mechanical Systems: Heating, ventilation, air conditioning (HVAC), plumbing, electrical, and fire protection systems.
Mathematical Considerations for Building Analysis
Area Calculations: Accurate measurement and calculation of building areas are critical for valuation.
Gross Building Area (GBA): The total area of a building, including all enclosed spaces.
Net Leasable Area (NLA): The area available for rent in a commercial building, excluding common areas.
Floor Area Ratio (FAR): The ratio of a building’s total floor area to the size of the land parcel it occupies.
FAR = Total Floor Area / Land Area
Cost Estimation: Estimating the cost of construction or replacement is essential for the cost approach to valuation.
Replacement Cost: The cost of building a new structure with the same utility as the subject property, using current materials and construction techniques.
Reproduction Cost: The cost of building an exact replica of the subject property, using the same materials and construction techniques.
Depreciation Analysis: Accounting for physical deterioration, functional obsolescence, and external obsolescence.
Depreciation = Physical Deterioration + Functional Obsolescence + External Obsolescence
Remaining Economic Life: The estimated period during which a building will continue to generate income or provide utility.
Conclusion
A comprehensive understanding of land and building attributes is fundamental for accurate real estate appraisal. Appraisers must apply scientific principles, conduct thorough site inspections, and analyze relevant market data to arrive at credible opinions of value.
Chapter Summary
This chapter, “Property Attributes: Land & Building Elements,” within the “Real Estate Appraisal: Land and Building Analysis” training course, emphasizes the critical role of detailed land and building analysis in accurate property valuation. The core scientific points are:
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Comprehensive Site Analysis: Appraisers must thoroughly investigate land characteristics, including soil composition, water rights (crucial for rural/agricultural land), drainage, irrigation, climate, and potential crops. Environmental controls, like regulations on herbicides and potential environmental liabilities (e.g., lead-based paint, underground storage tanks), must be considered. The presence and legal rights to mineral resources also significantly impact value. Unapparent environmental hazards, particularly on rural properties (cattle vats, old railroad beds), need assessment. Location relative to wildlife habitats and recreational potential are additional factors.
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Market-Driven Valuation: The impact of environmental factors, both positive and negative, must be derived from market data; appraisers’ subjective judgment is insufficient. Established analytical techniques can determine how cost, use, and risk factors related to environmental issues affect property prices. The influence of any impairment must be found in the marketplace.
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Detailed Building Analysis: Appraisers need to conduct thorough building analyses, assessing the type, quality, condition, design, and functional utility of improvements. This includes examining architectural style, layout, construction details, materials, energy efficiency, and mechanical systems. The analysis should identify all pertinent property strengths and weaknesses and interpret their significance for the highest and best use analysis.
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Importance of Site Visits: While not always required, site visits are critical for gathering primary data about the property and its immediate surroundings. Appraisers observe property characteristics to identify their influence on market value, enabling comparison of the subject property with comparable sales and accurate cost estimation. If a site visit is not performed, extraordinary assumptions about the property’s condition must be disclosed.
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Understanding Building Components: Appraisers must have a general understanding of the building construction process, operation of essential systems, and relevant codes and regulations. Consideration of “green” or high-performance building features is increasingly important due to their potential impact on operating costs, marketability, and tax advantages.
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Distinguishing Real vs. Personal Property: Appraisers must differentiate between real property (fixtures) and personal property, as only real property is typically valued unless otherwise specified by the client. The site visit provides an opportunity to determine if items are attached to the real estate and essential to its function.
The main conclusions are that a detailed understanding of land and building elements is fundamental to accurate real estate appraisal. Neglecting these attributes can lead to inaccurate valuations and flawed investment decisions.
The implications are that appraisers must possess a broad range of knowledge, including environmental science, agricultural practices (when applicable), construction techniques, and market analysis skills, to effectively assess property attributes. They should also be aware of the limitations of their expertise and when to seek input from other professionals, such as property inspectors or environmental consultants. Finally, appraisers must stay abreast of evolving building technologies and market trends, such as the increasing demand for green buildings, to provide credible and reliable property valuations.
