Chapter 6: Appraising Rural and Remote Properties Flashcards
The term “farmland” refers to which of the following?
1.) Land only with the purpose of producing vegetation to be consumed by animals and humans
2.) Land devoted to agricultural production, which may also include untillable areas and woodlots
3.) Farms registered under the Canadian Farming Act that are restricted to crops grown for humans and animals only
4.) All non-developed land that has vegetation, including forests, mountain ranges, and fields
2.) Land devoted to agricultural production, which may also include untillable areas and woodlots
Which of the following statements regarding rural land appraisers making adjustments for varying land sizes between the subject and comparable sales is FALSE?
1.) Small parcels tend to have a higher value per acre than larger properties.
2.) Using a standard value per acre unit of comparison for appraising acreages means you need no size adjustment, in that scale economies are already accounted for.
3.) A table of land size adjustment factors may assist the appraiser in making size adjustments
4.) All else equal, when working with dissimilar sized rural properties, the appraiser must consider if a size adjustment is warranted
2.) Using a standard value per acre unit of comparison for appraising acreages means you need no size adjustment, in that scale economies are already accounted for
Which of the following BEST describes the rectangular survey system?
1.) Based on sets of intersecting lines called principal meridians, which run north and south, and base lines, which run east and west
2.) Real estate is described using natural or man-made objects as reference points
3.) Divides the tract of land into blocks and lots when a tract is ready for development
4.) Measures effective area of outbuildings on farms.
1.) Based on sets of intersecting lines called principal meridians, which run north and south, and base lines, which run east and west
Which of the following is NOT a benefit of using GIS in rural appraisals?
1.) GIS measures lot sizes and areas
2.) GIS shows the lots physical features by overlaying orthophotos over the map
3.) GIS calculates value adjustments to account for a lot’s unusable areas.
4.) All of the above are benefits of GIS for appraisers
3.) GIS calculates value adjustments to account for a lot’s unusable areas.
You are valuing a two-acre vacant rural lot with a single-family residential highest and best use. The neighbouring property sold recently for $195,000. It is similar in all respects except for size and topography. The neighbouring property is 20 acres, but roughly 60% of the lot is steep, rocky hillside.
What is the BEST estimate of the effective size of this comparable?
1.) 5 acres
2.) 8 acres
3.) 12 acres
4.) 20 acres
2.) 8 acres
You are valuing a two-acre vacant rural lot with a single-family residential highest and best use. The neighbouring property sold recently for $195,000. It is similar in all respects except for size and topography. The neighbouring property is 20 acres, but roughly 60% of the lot is steep, rocky hillside.
Assuming the comparable’s entire 20 acres are level like the subject, which of the following statements is TRUE?
1.) With the sale being four times the subject’s size, its indicated value per acre of $9,750 ($195,000/20) could be applied to the smaller subject parcel
2.) If you drew a “star map” you would probably find the stars are most heavily distributed in the optimal spot for building a home
3.) Because of increasing returns to scale, the comparable’s size-adjusted value will likely increase in comparison to the unlevel example.
4.) None of the above
2.) If you drew a “star map”, you would probably find the stars are most heavily distributed in the optimal spot for building a home.
You have just been hired to compose a formal appraisal of a rural residential property. You are reviewing the description of the land in an old appraisal report and discover than an error has been made in the description of the borders of the land. Your BEST course of action would be to do which of the following?
1.) Ignore the error since you had nothing to do with it
2.) Call the original appraiser and ask them to correct the error
3.) Note the error in your report as well as the necessary steps you took to correct the error, and any assumptions made
4.) Refer the appraisal to someone more qualified to deal with legal issues
3.) Note the error in your report as well as the necessary steps you took to correct the error, and any assumptions made
How would an appraiser value a conservation easement without sufficient comparable easement sales?
1.) The appraiser would look at what area the easement affects, value that section of the land as if it were a separate parcel, and then subtract this from the value of the land as a whole
2.) Conservation easements can be valued based on the legal costs incurred in establishing them
3.) The appraiser would estimate the unencumbered value of the entire property and then deduct from the value of the property encumbered by the conservation easement; the difference would represent the value of the easement
4.) By following the standard rule-of-thumb that conservation easements are generally worth 25% to 85% of the land on which they are imposed
3.) The appraiser would estimate the unencumbered value of the entire property and then deduct from this value of the property encumbered by the conservation easement; the difference would represent the value of the easement
Which of the following statements regarding mineral resources is TRUE?
1.) Mines and minerals below surface are always owned by the registered property owner and the Crown has little control over its use
2.) Surface minerals such as sand, gravel, and topsoil can be extracted without permission as long as the overall depth of the pit is no deeper than 15 feet.
3.) The value of minerals depends on the profit that a mineral operator can benefit from their extraction.
4.) The direct comparison approach is the most practical valuation method for mineral resources on the land’s surface, since highly similar comparables are usually readily available.
3.) The value of minerals depends on the profit that a mineral operator can benefit from their extraction
Which of the following statements regarding using the income approach to value rural properties is FALSE?
1.) Cash rental or crop share arrangements are granted by individuals who choose not to farm their land, but instead lease the land so it can be farmed.
2.) The income approach is often a primary methodology used in valuing agricultural property.
3.) Going business concerns often have higher capitalization rates than properties that sell as land and buildings only
4.) In applying the income capitalization approach, the appraiser must consider the cyclical nature of farm revenues
2.) FALSE - The income approach is often a primary methodology used in valuing agricultural property
Which of the following statements BEST explains why an acre of wetland in northern Ontario could be worth $1,000 to a farmer, but $20,000 to a city dweller seeking a cottage?
1.) It is not possible for a property to have two market values and thus, the situation described above is not possible
2.) Wetlands make activities such as agricultural production infeasible without drainage or other wetlands because of their aesthetic appeal
3.) Wetlands are now protected under government statute and cannot be turned into farms, so the market value is $20,000; the value of the land to the farmer is irrelevant
4.) Farmers need wetlands, but they must be close to farming operations, whereas city dwellings prefer wetlands located far from urban centres so will place more value on properties further away from cities
2.) Wetlands make activities such as agricultural production infeasible without drainage or other wetlands because of their aesthetic appeal.
Which of the following statements regarding fixtures and chattels is FALSE?
1.) A fixture is typically a removable item installed by a tenant as a part of their business operations
2.) If the items are relevant for the appraisal and if the appraiser is competent in valuing items, then they must be included
3.) Personal property items are movable and are not permanently affixed to, or part of, the real estate
4.) A chattel is permanently affixed to the land and is regarded as part of the real estate.
4.) FALSE - A chattel is permanently affixed to the land and is regarded as part of the real estate.
Soil productivity is which of the following?
1.) A combination of soil fertility, climate, soil structure, and topography
2.) Less significant than soil fertility in the appraisal of agricultural land
3.) A defining constraint in designing septic sewer system
4.) One of the value-added components when evaluating gravel resources
1.) A combination of soil fertility, climate, soil structure, and topography
The method that uses a multiple linear regression model to estimate the value of a timber sale based on information for sale characteristics is which of the following?
1.) Disaggregation approach
2.) Adjustment-based approach
3.) Equation-based approach
4.) Direct comparison approach
3.) Equation-based approach
Which of the following describes a tendency for rural improvements in comparison to urban?
1.) Mixing of older improvements and newer buildings
2.) Numerous structures on the same lot
3.) Unique forms of construction
4.) All of the above
4.) All of the above
