CHICAGO (Aug. 31, 2011) – Real estate appraisers must consider the impact of local governments’ comprehensive plans when producing appraisals, according to an article published this week in The Appraisal Journal’s Summer issue.
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest organization of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.
“Use of the Local Comprehensive Plan in the Appraisal Process,” by Wayne Rasmussen, examines the important impact of a jurisdiction’s comprehensive plan on property’s current and potential value.
A comprehensive plan typically addresses land use, traffic routes, housing location and density, conservation and open space, noise, and safety. A plan also may establish urban limit lines that act as growth boundaries. The author notes that these governmental policies create both obstacles and incentives for development affecting the value of real estate.
The study reported in the Journal is significant because many times plan maps are used without a review of the accompanying text that sets out the intent and future plans of the governmental body creating the plan. The study advises that maps alone offer only a partial picture of a property’s potential. Background information, policy guidance and references in a plan have a significant impact and need to be understood before the appraiser reaches a conclusion of the highest and best use of the land and its value.
Rasmussen is president of Rasmussen Planning, Inc., a land use planning consulting firm located in San Ramon, Calif. He served as city planner at four cities in the San Francisco Bay Area between 1976 and 2005 before establishing his current practice in 2005.
Click here to read Use of the Local Comprehensive Plan in the Appraisal Process in the Summer 2011 issue of The Appraisal Journal.
Also in The Appraisal Journal’s Summer 2011 issue:
“Revisiting the Valuation of Timberland,” by Kim M. Kobriger, Ph.D., MAI, Cameron Boone, James Weiss and Andrew Chambers, examines how appraisers can help their noncommercial clients estimate the value of timber on their land when an expensive analysis by a forestry industry expert is beyond the needs of these clients.
“Using TEEM-Work to Extend Your Reach on the Real Estate/Business Value Continuum,” by Franz H. Ross and Adam A. Alessi, MAI, offers a simplified method for measuring the business enterprise component in an appraisal of a going concern.
“Implementing a Quality Control Review Process: The Need for Quality Control Review,” by Scott Schafer, explains internal quality control processes that help meet client needs and improve appraisal reports.