Okay, here is a detailed scientific introduction for a chapter entitled "Reconciliation and Final Value Opinion" in a training course entitled "Mastering Site Valuation: A Practical Approach," aiming for scientific precision and referencing the provided PDF.

Introduction: Reconciliation and Final Value Opinion

Site valuation, as a discipline, employs a range of methodologies to derive indications of value. These methodologies, including sales comparison, cost analysis, and income capitalization, are founded on distinct theoretical underpinnings and utilize diverse data inputs. Consequently, their application to a single property invariably yields multiple, and potentially disparate, value indicators. This chapter, "Reconciliation and Final Value Opinion," addresses the critical stage in the appraisal process where these multiple value indicators are rigorously analyzed and synthesized to arrive at a single, supportable opinion of value. This process, termed reconciliation, transcends simple averaging or formulaic combination; rather, it necessitates a critical evaluation of the reliability, relevance, and accuracy of each individual value indicator.

The scientific importance of reconciliation stems from its role in mitigating bias and enhancing the objectivity of the valuation process. As highlighted in the appraisal literature, and reflected in review appraisal practice, unchallenged reasoning and unsubstantiated conclusions are vulnerable to critical scrutiny. Therefore, a transparent and well-reasoned reconciliation process, explicitly articulating the rationale for assigning differing weights to various value indicators, is paramount for defending the final value opinion. This chapter emphasizes the necessity of demonstrating that the reconciled value is firmly supported by the totality of evidence gathered and analyzed during the appraisal, aligning with the overarching principle that the appraiser's judgment must be data-driven and defensible.

This chapter aims to equip the student with the following core competencies:

1. Critical Evaluation of Value Indicators: To scientifically assess the reliability of each value indicator based on the quantity and quality of supporting data, the rigor of the applied methodology, and the relevance to the specific appraisal problem as explicitly defined by the terms of the assignment. This includes verifying the accuracy of all calculations and ensuring consistent application of methodologies across the subject property and comparable properties.

2. Justification of Weighting Factors: To articulate a clear and logical rationale for the weighting applied to each value indicator, considering factors such as the statistical significance of the supporting data (e.g., larger sample sizes, multiple independent sources), the potential for bias in the data, and the appropriateness of the appraisal technique to the subject property type and market conditions.

3. Formulation of a Supportable Final Value Opinion: To synthesize the reconciled value into a single, well-defended opinion of value (a point estimate) or, when warranted, a clearly defined range of value. The chapter will cover accepted practices for rounding value opinions and communicating the rationale behind the final estimate in a manner readily understandable to a non-appraiser reader.

4. Adherence to Industry Standards: To properly complete the reconciliation section of the Uniform Residential Appraisal Report (URAR) and ensure full compliance with the relevant standards outlined in the Uniform Standards of Professional Appraisal Practice (USPAP).

By mastering the principles and techniques presented in this chapter, the student will be prepared to render credible and defensible value opinions, capable of withstanding critical review and contributing to sound decision-making in real estate transactions.

Here's a detailed scientific introduction suitable for the specified chapter:

Introduction: Reconciliation and Reporting: Deriving the Final Value Opinion

The valuation of real property is a complex undertaking involving the systematic application of accepted appraisal methodologies. Following the rigorous analysis of market data, cost estimations, and income capitalization, a critical juncture is reached: reconciliation. This chapter addresses the principles and practices underpinning the reconciliation process, which is defined as the critical analysis of disparate value indicators to arrive at a single, supportable opinion of value for the subject property. This reconciled value opinion represents the appraiser's expert synthesis of multiple, potentially conflicting data streams into a cohesive and defensible final conclusion.

The scientific importance of reconciliation stems from the inherent uncertainty associated with each individual valuation approach. The sales comparison approach, while often providing the most direct indication of market value, relies on the availability of comparable properties and the subjective judgment involved in making adjustments for dissimilarities. The cost approach, based on the principle of substitution, necessitates accurate cost estimations and depreciation analyses, which can be prone to error. The income capitalization approach, relevant for income-producing properties, requires accurate forecasting of future income streams and the selection of appropriate capitalization rates. Each approach therefore introduces a degree of inherent uncertainty. Reconciliation, properly executed, functions as a method of error mitigation, whereby the strengths of one approach can compensate for the weaknesses of others, enhancing the overall reliability of the final value opinion.

This chapter is designed to achieve the following educational objectives:

1. To deconstruct the reconciliation process into its constituent steps, emphasizing the scientific basis for appraiser judgment and the rejection of simplistic averaging techniques.
2. To elucidate the factors influencing the reliability of individual value indicators, including data quantity, data accuracy, and relevance to the specific appraisal problem, thereby providing a framework for weighting the relative importance of each approach.
3. To demonstrate the integration of reconciliation with the appraisal reporting process, focusing on clear and concise communication of the appraiser's reasoning and the rationale for the final value opinion.
4. To reinforce the importance of compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) guidelines regarding reconciliation and reporting.

By mastering the principles and techniques outlined in this chapter, participants will be equipped to develop and articulate defensible value opinions, contributing to the integrity and reliability of real estate valuation practices.

Okay, here's a detailed scientific introduction for the chapter "Site Valuation Techniques," part of the training course "Mastering Site Valuation: A Practical Approach," as requested, based on the provided file content.
File content PDF (relevant part):
son for a separate site valuation is to obtain data for certain valuation techniques. In particular, the cost approach to value and the building residual technique of income capitalization both require a separate estimate of site value. If either of these techniques is used in an appraisal, a separate site valuation is necessary. (The cost approach to value is covered in detail in Chapter 8. The building residual technique is discussed in Chapter 10.)
A separate valuation of site and improvements may also be required by law, particularly in appraisals for property tax assessment and condemnation purposes. In these cases, a separate site evaluation is required by the scope of the appraisal assignment itself. (Site valuation is covered in detail in Chapter 6.)
VII. Step 6: Applying the Three Approaches to Value
Having collected data, analyzed highest and best use, and evaluated the site, the appraiser is ready to apply the three approaches to value. These are the sales comparison approach, the cost approach, and the income approach. Each of these approaches results in an indication of value, also called a value indicator. The appraiser will then reconcile these value indicators in Step 7, reconciliation.
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A. COST APPROACH
The COST APPROACH assumes that the value of improved property is indicated by the value of the site, plus the cost (new) to construct the improvements, less any depreciation that the improvements have suffered. DEPRECIATION is the difference in value between the cost (new) of the improvements and their current value, regardless of the reasons for the difference. The cost approach can be expressed by the formula:
Property Value of Site (by Cost Approach)

NAME?

NAME?

NAME?

As noted earlier in this chapter, the cost approach requires a separate valuation of the site. The appraiser then estimates what it would cost to replace any existing structures, and adds this amount to the site value. The cost of replacing the structures is estimated as of the date of valuation.
Finally, the appraiser estimates the difference in value between the existing improvements and the cost of replacing them (depreciation), and deducts this amount to arrive at the final value indicator. This does not mean that the appraiser simply subtracts the current value of the improvements from their cost; if the current value of the improvements were known, there would be no reason to calculate depreciation in the first place. Rather, the appraiser must estimate the effect on value of separate items, such as physical deterioration of the improvements, or a loss in value due to an out-dated design. Estimating accrued depreciation is often the most difficult part of applying the cost approach to value, especially for older improvements or improvements that do not conform to the highest and best use of the land as if vacant. (The cost approach to valuation will be covered in detail in Chapter 8.)
B. SALES COMPARISON APPROACH
The sales comparison approach to value is also known as the market approach or market data approach. Under the SALES COMPARISON APPROACH, the value of the subject property is indicated by the values (sale prices) of similar properties in the market. These similar properties are referred to as comparables. The two keys to effective use of the sales comparison approach are:
1. identifying similar properties that are truly “comparable” to the subject property; and
2. making the proper adjustments to the sales prices of the comparable properties to
account for any differences between the subject property and the comparables.
The considerations in identifying legitimate comparables were discussed earlier in this chapter. It is relatively rare, however, to find two properties that are so comparable that there is no difference in their values. For this reason, the adjustment process is central to the sales comparison approach. In the adjustment process, the sales price of the comparable property
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is adjusted (up or down) to reflect aspects of the comparable property that are viewed as less valuable or more valuable in comparison to the subject property.
Case/Example: An appraiser identifies a comparable property that is similar to the subject property in all respects, except the subject property has only one bath, while the comparable has two. The comparable property sold recently for $145,000. Current market data indicates that an extra bath adds $5,000 to the values of homes similar to these. So the appraiser would subtract the value of the more desirable feature (the extra bath) from the price of the comparable, to arrive at an indicated value of $140,000 for the subject property.
The sales comparison approach may be summarized by the formula:
Subject Value = Comparable Sales Price +/- Adjustments
(The sales comparison approach to valuation will be covered in detail in Chapter 9.)
C. INCOME APPROACH
The third approach to value is the income approach. This INCOME APPROACH assumes that the value of property is indicated by the amount of income that the property can generate: the greater the income, the greater the value.
The income approach may use net income or gross income.
Typically, residential appraisers utilize the gross rent multiplier to determine value by the income approach. In this approach, the monthly income from each comparable rental sale is divided into its sale price to determine a GROSS RENT MULTIPLIER. The appraiser then selects a multiplier from the range thus determined and multiplies it by the subject’s gross monthly income (say, $1,525 in this case) to determine a value by the income approach.
This process would be carried out for each rental sales comparable (six comparables in this case). From the above process, a range of multipliers would result.
Case/Example: 132, 133, 135, 135, 135, 140
From the above example, we can see that 135 is the most likely multiplier. Thus:
$1,525 Subject Monthly Rent x 135 = $206,000 (rounded) Value by Income Approach.
(The income approach to valuation is covered in detail in Chapter 10.)
VIII. Step 7: Reconciling the Value Indicators
Each of the three approaches to value results in a separate indication of value for the subject property. In general, the greater the similarity among the three value indicators, the more reliable they are. However, it is very rare for all three value indicators to be identical. When the value indicators are not identical, the appraiser must somehow forge the value indicators into one estimate of value. This process is called reconciliation. RECONCILIATION is the process of analyzing the appraisal problem, selecting the most appropriate method of the three, and giving it the most weight in determining the final estimate of value.
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Reconciliation is the easiest process when the value indicators are very similar.
In that case, it is usually safe to assume that the value of the property lies somewhere between the lowest value indicator and the highest.
Case/Example: An appraiser arrives at the following value indicators: Cost Approach: $150,000
Market Approach: $145,200
Income Approach: $144,500
Since the value indicators are reasonably similar to each other, the value of the property is probably somewhere between $144,500 (the lowest indicator) and $150,000 (the highest indicator).
However, the process of reconciliation is not a simple averaging of the three value indicators. In fact, there is no set formula at all for reconciling the values. The process relies entirely on the judgment and ability of the appraiser to arrive at the most reliable estimate of value.
A primary consideration in the reconciliation process is the relative reliability of the three value indicators, especially when there is a wide disparity between the three indicators. For this reason, the reconciliation process requires a thorough review of the complete appraisal process. The appraiser must review the reliability of the data, the logic and analysis applied to the data, and the resulting value indicators.
Figure 3-4 is taken from the “Reconciliation” section of the Uniform Residential Appraisal
Report. It shows if the appraisal is being made “as is” or “subject to” completion of work.
Figure 3-4
Reconciliation Section - URAR
In addition to reviewing and considering the reliability of the various value indicators, the appraiser will also consider the use of the appraisal. For example, all things being equal, more weight may be placed on the value indicated by the income approach in the case of an appraisal that will be used by an investor who is looking for income property. On the other hand, if the
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appraisal is being used to help the owner-occupant purchaser qualify for a home loan, the sales comparison data approach may be considered the most reliable. (Reconciliation and final value estimation will be covered in detail in Chapter 11.)
IX. Step 8: Reporting the Value Estimate
The final step in the appraisal process is the preparation of the appraisal report.
A. THE TWO BASIC APPRAISAL REPORTS
According to Standard 2 of USPAP, there are two types of appraisal reports:
1. Appraisal Report – summarizes sufficient information to be understood by the client.
It is typically found in a form report.
2. Restricted Appraisal Report – states information and is restricted to the use of one client.
These reports may be either oral or in writing. Reports for federally-related loan transactions must be in writing. The Uniform Standards of Professional Appraisal Practice do not dictate the form or format of either type of report.
Reports can either be in narrative, in a form report, or an oral report.
Note: Form reports provided by lenders (including Fannie and Freddie) are not always compliant with USPAP. The appraiser is cautioned that he or she is required to supplement a form report with an addendum when necessary to ensure compliance with USPAP.
1. Narrative Report
A NARRATIVE REPORT is the most detailed form of appraisal report. It describes the data analyzed by the appraiser, the conclusions drawn, and the reasoning behind the stated conclusions.
2. Form Report
The FORM REPORT is probably the most commonly used type of report for residential appraisals. Form reports are used by many lenders and government agencies. The form report typically presents the data used by the appraiser and the appraiser’s conclusions. There is a limited amount of space on the form for discussing the reasoning behind the appraiser’s conclusions; if necessary, the appraiser should use an addendum to provide additional information needed in order to understand the appraiser’s value conclusions.
All appraisal forms submitted to Fannie Mae and Freddie Mac must now be completed and turned in electronically (see efanniemae.com).
Note: Form reports provided by lenders (including Fannie and Freddie) are not always compliant with USPAP. The appraiser is cautioned that he or she is required to supplement a form report with an addendum when necessary to ensure compliance with USPAP.
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3. Oral Report
An ORAL REPORT, as the term implies, is delivered to the client orally rather than in writing. The amount of detail contained in an oral report will depend on the circumstances and the needs of the client.
B. ESSENTIAL ELEMENTS OF THE APPRAISAL REPORT
It is important to note that regardless of the form of the appraisal report, the appraiser should always keep good detailed records of the data, analysis, and conclusions that form the basis of the appraisal. Also, even the simplest appraisal report should contain the following elements:
1. identification of the subject real estate;
2. identification of the real property rights appraised;
3. the purpose of the appraisal;
4. the definition of value used in the appraisal;
5. the effective date of the appraisal, and date of the report;
6. a description of the scope of the appraisal; and
7. any assumptions and limiting conditions that affect the appraisal.
Appraisal reports will be covered in detail in Chapter 12.
Note: For appraisal reports prepared using the Uniform Appraisal Dataset (UAD) specification, the PDF must be noted with the UAD version that was utilized in the preparation. E.g., the following notation “UAD Version 9/2011” must appear at the bottom of each page in the bottom margin with placement to the left of the page number:
UAD Version 9/2011
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X. CHAPTER SUMMARY
I. The appraisal process consists of 8 steps that guide the appraiser to a competent estimate of value.
II. Step 1 – Defining the Appraisal Problem.
A. Appraiser must know what the client wants, and the terms and conditions of the appraisal assignment.
B. What is to be appraised?
1. Identity of the real estate is established by the legal description.
a. The appraiser must identify and consider any personal property that is included in the appraisal, as well as any repairs and improvements that will be made to the property.
2. The real property rights to be appraised will affect the value estimate. Most appraisals are concerned with the fee simple interest, but appraisals may be made for limited or partial interests as well.
3. The appraiser must consider all the rights that benefit the property, as well as all restrictions that may affect value.
4. The purpose of the appraisal is the type of value to be estimated. The value should always be defined.
C. When is it to be appraised?
1. Appraisals estimate value as of a specified date: the valuation date or effective date of the appraisal.
2. The valuation date may or may not be the same as the appraisal report date.
Appraisals are sometimes made for past or future values, as well as current values.
D. Why is it to be appraised?
1. The use of the appraisal will affect the appraiser’s selection of data, and also the appraiser’s judgments in the reconciliation phase of the appraisal.
2. Knowing the use of the appraisal also allows the appraiser to limit liability arising from the appraisal.
E. How is it being valued?
1. The scope of the appraisal is the extent to which the appraiser will collect, verify and report data. Scope may vary depending on the nature of the appraisal assignment, and may affect the cost of the appraisal (the appraisal fee).
2. Assumptions and limiting conditions are stated in order to help readers of appraisal reports to understand the significance of the data and conclusions presented in the
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report. This is especially important when the reader is relatively unsophisticated, and likely to draw unwarranted conclusions from the report.
3. Assumptions and limiting conditions also protect the appraiser by limiting liability.
F. USPAP requires that the elements identified in defining the appraisal problem be included in the appraisal report.
III. Step 2 – Preliminary Analysis.
A. The appraiser must identify the data that will be necessary to complete the appraisal report.
1. General data relates to the market in general. Specific data relates to a particular property. Competitive supply and demand data is information about the future supply of and demand for competitive properties in the marketplace.
2. Primary data is collected directly by the appraiser. Secondary data is collected from published sources.
3. Data is used in appraisal to identify: market trends, probable future supply and demand of competitive properties, and characteristics of the subject property and comparables.
B. A property is comparable if it is physically similar to the subject property, appeals to the same kinds of buyers, is located in the same market area, and is sold within a limited period of time from the effective date of the appraisal.
C. The appraiser must identify the sources from which the necessary data can be obtained. D. The appraiser then prepares a work schedule for the appraisal assignment (either
mentally or on paper).
IV. Step 3 – Collecting the Data.
A. The accuracy of data used in an appraisal must be verified, either by personal inspection or by cross-checking between sources.
B. All data used in an appraisal should be relevant to the value of the subject property. V. Step 4 – Analyzing Highest and Best Use.
A. All appraisals must consider highest and best use.
B. For improved property, the appraiser must analyze highest and best use of the property as improved, and also of the property as if vacant.
VI. Step 5 – Valuing the Site.
A. A site is land that has been prepared for use or construction, as by clearing, grading, and provision of access and utilities.
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B. Site valuation may be necessary for highest and best use analysis, for application of certain appraisal techniques, and/or by virtue of the scope of the appraisal.
VII. Step 6 – Applying the Three Approaches to Value.
A. The sales comparison approach (market data approach) indicates value by analyzing the sales of similar (comparable) properties.
1. The more similar the comparables are to the subject property, the more reliable they are as indicators of value.
2. Sales prices of comparables must be adjusted to account for any differences between the comparables and the subject property, including physical differences, changes in market conditions, and differences in the terms of sale.
B. The cost approach indicates value by estimating the value of the land separately, then adding the estimated cost (new) of the improvements, and then subtracting depreciation that the improvements have suffered.
1. The older the improvements, the more difficult it becomes to estimate depreciation, and the less reliable is the value indication given by the cost approach.
C. The income approach uses a gross rent multiplier for residential properties. VIII. Step 7 – Reconciling the Value Indicators.
A. The appraiser must reconcile any differences between the values indicated by the three approaches to value.
B. Reconciliation involves analysis of the reliability of the value indicators, and application of the appraiser’s judgment as to the most reliable estimate of value.
IX. Step 8 – Reporting the Value Estimate.
A. The narrative report is the most detailed type of appraisal report. It sets out the data relied on by the appraiser, and explains the analysis of the data and the reasoning that led to the appraisers final estimate of value.
B. Form reports include much of the data that supports the appraiser’s conclusion, but may not include complete explanations of the appraiser’s reasoning. Form reports are used by many lenders, insurers and government agencies.
C. Appraisal reports are sometimes given orally, generally in courtroom settings.
D. Regardless of the form of an appraisal report, it must contain the elements required by
USPAP.
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XI. CHAPTER QUIZ
1. The effective date of an appraisal is:
a. the date of the appraisal report.
b. the date the appraiser accepts the appraisal assignment.
c. the date as of which value is estimated.
d. the date on which the appraiser inspects the subject property.
2. The standard of value refers to:
a. the kind of value the client wants to know. b. the amount of appraisal fee.
c. the dollar amount of the opinion of value. d. none of the above.
3. In defining an appraisal problem, it is important to identify:
a. the use of the appraisal. b. the standard of value.
c. the intended uses. d. all of the above.
4. In defining an appraisal problem, it is important to identify:
a. the use of the appraisal.
b. the purpose of the appraisal.
c. the scope of the appraisal.
d. all of the above.
5. An appraiser may analyze sales of comparable properties in the:
a. sales comparison approach. b. cost approach.
c. income approach. d. all of the above.
6. Which of the following is NOT a part of defining an appraisal problem?
a. Identifying the real estate
b. Identifying the real property interest
c. Identifying the sources of data
d. Agreeing on the limiting conditions
7. In an appraisal report, real estate is identified by means of its legal description because:
a. it is the most commonly accepted way to do it. b. it is required by law in all cases.
c. it is the most accurate way to describe the real estate.
d. it helps prevent unauthorized persons from understanding the appraisal report.
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8. The assumptions and limiting conditions stated in an appraisal report are for the benefit of:
a. the appraiser. b. the client.
c. third parties.
d. all of the above.
9. Which of the following would NOT be considered specific data?
a. The location of a property
b. Evidence of population shifts in a neighborhood
c. The size of a lot
d. The terms and conditions of a sale
10. A site may be valued separately from its improvements:
a. to provide data for certain valuation techniques.
b. because it is required by the scope of the appraisal.
c. as part of the highest and best use analysis.
d. all of the above.
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KEY WORDS AND TERMS
Annuity
Artificial Markers
Baseline
Bench Mark
Direct Capitalization
Discounting
Compound Interest
Correction Line
Future Value
Geodetic Survey System
Guide Meridian
Government Lots
Interest Formula
Legal Description
Lot, Block, and Tract System
Mean
Median
Meridian
Metes and Bounds System
Mode
Natural Monument
Point of Beginning
Present Value
Range
Range Lines
Reciprocal
Rectangular Survey System
Reference Point (Monument)
Sections
Standard Deviation
Standard Parallels
Townships
True Point of Beginning
LEARNING OBJECTIVES
After completing this chapter, you should be able to:
1. name the three major systems of land description used in the United States, and explain how land is described under each system,
2. calculate the area and volume of complex figures,
3. solve problems involving percentages, interest, capitalization rates, and income multipliers, and
4. use a financial calculator or table to solve problems involving discounting and annuities.
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CHAPTER OUTLINE
I. PROPERTY DESCRIPTION (p. 111)
II. METES AND BOUNDS SYSTEM (p. 111)
A. Reference Points (p. 112)
B. Courses and Distances (p. 114)
1. Metes and Bounds Descriptions in Appraisals (p. 114)
III. RECTANGULAR (U.S. GOVERNMENT) SURVEY SYSTEM (p. 114)
A. Base Line and Meridian (p. 114)
B. Townships (p. 115)
C. Sections (p. 116)
D. Partial Sections (p. 116)
E. Adjustments and Government Lots (p. 118)
F. Rectangular Survey System Descriptions (p. 118)
G. Geodetic Survey System (p. 118)
IV. LOT, BLOCK, AND TRACT SYSTEM (p. 119)
V. APPRAISAL MATH (p. 119)
A. Distance, Area, and Volume (p. 120)
B. Area of a Rectangle (p. 121)
C. Units of Area (p. 122)
D. Converting Units (p. 122)
E. Area of a Triangle (p. 123)
F. Right Triangles (p. 124)
G. Areas of Complex Figures (p. 125)
H. Volume (p. 125)
I. Reciprocals (p. 125)
J. Percentages (p. 128)
K. Direct Capitalization (p. 129)
L. Interest (p. 131)
VI. FINANCIAL CALCULATIONS (p. 131)
A. Present and Future Value (p. 132)
B. Interest Compounding (p. 132)
C. “Hoskold” or Sinking Fund Method (p. 133)
D. “Inwood” Method (p. 133)
VII. MEASURES OF CENTRAL TENDENCY (p. 134)
VIII. CHAPTER SUMMARY (p. 135)
IX. CHAPTER QUIZ (p. 137)
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I. Property Description
The orderly process of creating boundaries for land ownership and describing them is referred to as a legal description. The land within the boundaries is often referred to as a “parcel, lot, plot, or tract.” These terms may refer to all types of improved or unimproved land.
A PARCEL of land generally refers to any piece of land that may be identified by a legal description in one ownership. Thus, every parcel of real estate is unique.
Although an appraiser is not a surveyor, he or she should be able to read and understand a “legal” description of real estate, since most appraisals require a legal description in order to adequately identify the subject property. Appraisers must also be comfortable applying a variety of different mathematical techniques and formulas that are used in the valuation process.
In everyday life, real estate is normally identified by its street address, for example “111 Main Street” or “1517 Park Avenue.” Some properties may also be known by a common name, such as “Empire State Building,” or “South Fork Ranch.” These methods of property description are suitable for many purposes, but they are of little use when it comes to determining the exact boundaries of a parcel of real estate.
A street address or a descriptive name are informal descriptions. They are NOT
considered to be legal descriptions.
Therefore, the appraiser should use what is called a legal description of the subject property. A
LEGAL DESCRIPTION of property is one that is adequate to identify the property’s exact boundaries.
In most cases, a property’s legal description is given to the appraiser by the appraisal client. It is not the appraiser’s responsibility to verify the accuracy of the description or to survey the property. However, an appraiser should be able to recognize whether the description meets the local standards, and he or she should also be able to identify the real estate that is described in the legal description.
There are three methods of legal description commonly used in the United States:
1. The Metes and Bounds System
2. The Rectangular (U.S. Government) Survey System
3. The Lot, Block, and Tract System
Different areas of the country use different systems or combinations of systems, depending on local law and custom. Appraisers should have a basic understanding of each of the three major systems of land description.
II. Metes and Bounds System
The metes and bounds system is the oldest of the three methods of legal description. It also tends to be the most complicated. This METES AND BOUNDS SYSTEM is the method of identifying (describing) property in relation to its boundaries, distances, and angles from a given
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starting point. It gives directions and distances that could be followed by a surveyor to trace the boundaries of the property.
There are three basic elements in a metes and bounds description:
1. Reference Points,
2. Courses, and
3. Distances.
A. REFERENCE POINTS
A REFERENCE POINT (sometimes called a monument) is an identifiable, fixed position from which measurements may be taken. A common example of a reference point is a fixed survey marker that has been permanently set in the ground. Artificial landmarks such as metal stakes are also used as reference points in metes and bounds descriptions.
“Artificial markers” are man made. “Natural monuments” would be natural objects such as trees or rocks.
All metes and bounds descriptions begin at a reference point that serves to locate the property with respect to adjoining surveys in the area. This initial reference point is known as the POINT OF BEGINNING (POB). BOUNDS describe the point of beginning, which is also the point (or reference point) of return, and all intermediate points. The term “point of beginning” can sometimes be confusing, since it can be used to refer to a stone monument as the place to start (see Figure 4-1).
A metes and bounds description of this property would start by identifying the true point of beginning, in reference to the stone monument located 2804’ south of the true point of beginning. These different points are the initial reference point for the description, and the point at which the description of the actual property boundaries begins. Sometimes these two points coincide, but often they do not.
To distinguish between the initial reference point of the description and the first point on the actual property boundary, the latter is sometimes referred to as the TRUE POINT OF BEGINNING. Figure 4-1 shows the relationship between the point of beginning, which is the initial reference point for the description, and the true point of beginning, which is the point at which the description of the actual boundaries of the property begins.
B. COURSES AND DISTANCES
Once the true point of beginning is established, the metes and bounds description proceeds to describe each boundary of the property. METES describe the direction one moves from one reference point to another and the distances between points. One moves from one point to another by knowing the courses of each point. COURSES are degrees, minutes, and seconds of angle from north or south. The boundaries are described in sequential order, ending up back at the true point of beginning.
There are 360 degrees in a circle, so 1 degree (1º) is an angle 1/360th of a circle. One minute is 1/60th of 1 degree (1’) and one second is 1/60th of 1 minute (1”).
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Figure 4-1
True Point of Beginning (Starting Point)
Point of Beginning
(Arrow Hwy. & Haven St.)
PLACE OF START
Essentially, the description is a set of instructions that would enable someone to walk around the boundaries of the property. Each instruction corresponds to one boundary of the property; it tells which direction to go to follow the boundary (the course), and how far to go before changing to another direction (the distance).
Example: A typical instruction or “call” in a metes and bounds description might read: “South 89 degrees 19 minutes East, 2664 feet”. This tells the reader to proceed on a course that is 89º 19’ to the East of true south, for a distance of 2664 feet.
A course in a metes and bounds description may be stated in one of two ways. If the course is precisely along one of the four cardinal directions, it is usually stated as simply North, South, East or West. All other courses are stated in terms of their quadrant (northeast, northwest, southeast, or southwest) and their angle in relation to a line running north and south.
Northwesterly and northeasterly courses are stated in terms of the angle from north; southwesterly and southeasterly courses are stated in terms of the angle from south. The angle is given in terms of degrees, minutes, and seconds. (In angular measurements, a degree (º) is equal to 1/360th of a full circle; a minute (‘) is equal to 1/60th of a degree; and a second (“) is equal to 1/60th of a minute or 1/360th of a degree.) The size of the angle is written in between the two cardinal directions that form the boundaries of the quadrant.
Example: A southeasterly course that forms an angle of 89º 19’ E degrees from true south would be stated as South 89 degrees 19 minutes East, or S 89º 19’ E. The angle is written between the two cardinal directions that identify the quadrant.
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Case/Example: Starting at the stone monument at the intersection of Haven Street and Arrow Highway (“Point of Beginning”) in Cucamonga California, go N5º 33´W; 1804 feet to the second fence corner referred to as the
”True Point of Beginning (Starting Point).” Starting at the NW fence corner, go S89º 19´E, 2664 feet; at the NE
fence corner, go S0º 32´E for 1302 feet along the stone wall to the iron pin; at the SE corner, go N89º 11´W for
2550; at the SW corner, go N5º 33´W 1804 feet back to the starting point.
1. Metes and Bounds Descriptions in Appraisals
Metes and bounds descriptions can be very long and complex, which creates opportunities for errors whenever the description must be copied. For this reason, the description is often photocopied from a deed or other document, and the photocopy is attached as an addendum to the appraisal. This does not guarantee the accuracy of the description, but it at least prevents errors in its transcription. Appraisers can calculate a parcel area imputing the metes and bounds description into a computer program. The computer program can also simulate a survey around the boundary of the property to see if the description ends at exactly the point of beginning.
The laser transit used by surveyors has made for more accurate determinations of points, directions and distances. Uncertainty with regards to points of beginning has largely been eliminated through the use of established BENCH MARKS, which are survey markers set in heavy concrete monuments. Satellite technology has also been utilized by surveyors to locate points.
The metes and bounds system is often used instead of the rectangular survey system, and is especially good when describing unusual or odd-shaped parcels of land.
III. Rectangular (U.S. Government) Survey System
The second major system of property description is the rectangular survey system, also known as the United States government survey system. In this system, property is described in relation to a rectangular grid that has been established by federal government survey.
The rectangular survey system was established by law in 1785.
It covers most areas of the country that were not already settled as of the date the system was established. Separate rectangular grid systems have been surveyed for most areas of the country, the main exception being the eastern states.
A. BASE LINE AND MERIDIAN
Each main grid in the rectangular survey system has an initial reference point, which serves as the basis for locating all properties in the grid. The initial reference point is the intersection between the PRINCIPAL MERIDIAN, running north and south, and the BASE LINE, which runs east and west.
These baselines and meridians are simply surveyor reference lines. Land is measured from the intersection of these baselines and meridians.
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Each grid system has its own unique name, corresponding to the name of its principal meridian. Property descriptions that use the rectangular survey system must refer to the name of the particular grid that is the reference for the description.
Case/Example: The rectangular survey in Southern California is based on the San Bernardino Principal Meridian and Base Line. A rectangular survey description in this area would refer to the “San Bernardino Base and Meridian,” or “S.B.B. & M” (see Figure 4-2).
Figure 4-2 San Bernardino Base and Meridian - S.B.B. & M.
B. TOWNSHIPS
Each rectangular survey grid consists of a series of lines that run parallel to the principal meridian and the base line, at intervals of six miles. The east-west lines (running parallel to the base line) are called TIER LINES. The north-south lines (parallel to the principal meridian) are referred to as RANGE LINES. Figure 4-3 shows principal meridian, base line, tiers and ranges.
Township lines divide the land into a series of east-west strips, called TIERS. Range lines divide the land into north-south strips called RANGES. Where a tier intersects with a range, the result is a six miles by six miles square of land known as a TOWNSHIP. Thus, each township contains
36 square miles. Townships are the main divisions of land in the rectangular survey system. Each township is identified according to its distance from the principal meridian and base line.
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Figure 4-3
Tiers, Ranges, and Townships
Tier 4 North
Tier 3 North
San Bernardino
6 Miles x
6 Miles
BASE LINE
Fig.
04-أبريل
Tier 2 North
Tier 1 North
Tier 1 South
N
Case/Example: The township that is located at the intersection of the first township tier north of the base line, and the third range east of the principal meridian, is called:
“Township 1 North, Range 3 East”, or “T1N, R3E”
C. SECTIONS
Each six-mile-square township is divided into an even smaller rectangular grid, with grid lines (called section lines) spaced one mile apart. The section lines run both north-south and east-west within the township. The result is that each township contains 36 sections, each SECTION measuring one mile on a side and containing 640 acres. The sections are numbered from 1 to 36, starting with Section

Introduction: Appraisal Principles & Procedures

This chapter, "Appraisal Principles & Procedures," forms a foundational element within the broader training course, "Mastering Site Valuation: A Practical Approach." It provides a systematic and scientifically grounded exploration of the core principles and standardized procedures that underpin real estate appraisal, specifically focusing on site valuation. Accurate and reliable site valuation is critical not only for individual property transactions but also for broader economic stability, urban planning initiatives, and the effective functioning of real estate markets. Erroneous valuation, derived from a flawed application of fundamental principles or procedural missteps, can cascade into significant financial risks for investors, lenders, and governmental entities, ultimately distorting market efficiency and hindering optimal resource allocation.

The scientific importance of understanding appraisal principles lies in their derivation from economic theory, statistical analysis, and empirical observation of real estate market behavior. Principles such as supply and demand, substitution, anticipation, and contribution are not merely heuristics but are quantitatively demonstrable forces influencing property value. This chapter will elucidate the theoretical basis for these principles and demonstrate their practical application through case studies and quantitative examples. Furthermore, the chapter will detail the standardized procedures, adhering to the Uniform Standards of Professional Appraisal Practice (USPAP), that provide a rigorous framework for the appraisal process. These procedures, encompassing problem identification, scope of work determination, data collection and analysis, application of valuation approaches (sales comparison, cost, and income capitalization), reconciliation, and report generation, are designed to minimize subjective bias and ensure transparent, replicable results.

The educational goals of this chapter are multifaceted. Upon completion, participants will be able to: (1) Articulate and critically evaluate the fundamental economic principles that drive real estate value, with a specific emphasis on their relevance to site valuation. (2) Demonstrate a comprehensive understanding of the USPAP framework and its application to the appraisal process, ensuring adherence to ethical and professional standards. (3) Systematically apply the established procedures for site valuation, including data collection, market analysis, and the selection and justification of appropriate valuation approaches. (4) Identify and mitigate potential sources of error and bias in the appraisal process, leading to more reliable and defensible value conclusions. (5) Critically analyze existing appraisal reports to assess their adherence to accepted principles and procedures, fostering a capacity for informed decision-making in real estate transactions. Ultimately, this chapter aims to equip participants with the knowledge and skills necessary to conduct and interpret site valuations with scientific rigor and professional integrity.