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  1. Applies in ad valorem taxation and refers to the value of a property according to the tax rolls. May or may not conform to market value
  2. Estimates the degree of similarity or difference between the subject property and the comparable sales.
    Dollar or percentage adjustments are applied to the sale price of each comparable property.
    Adjustments of comparable sales bring their sale price relative to the subject property.
  3. A set of arrangements in which buyers and sellers are brought together through the price mechanism. Defined by location, products, the number of buyers and sellers, etc.
  4. Rural land is seldom held in fee simple due to access easements, utility easements, mineral reservations, and other encumbrances.

    When a right is separated from the bundle of rights and transferred or mortgaged, a partial (or fractional) property interest is created.
  5. Determined by the client
    Possible Reasons: 1. Transfer of ownership, 2. Financing, 3. Determination of compensation in condemnation proceedings, 4. Tax assessed value, 5. Investment decision.
  7. Outside forces that effect property values.
    Economies: have positive effects on its value.
    Diseconomies: have a negative effect on value.
  8. moderate limitations that reduce the choice of plants or that require moderate conservation practices.
  9. Percolating groundwater
    Rule of Capture
    All underground water is considered as percolating, except when it is proven that the alleged subterranean water course has the characteristics of a stream
    Underground streams
    Appropriated Water Rights
  10. Must conform with zoning, building codes, environmental regulations, etc.
  11. 1. Definition of the problem.
    2. Preliminary analysis and data selection and collection.
    3. Highest and best use analysis.
    4. Land value estimate.
    5. Application of the three approaches to value.
    6. Reconciliation of value indications and final value estimate.
    7. Report of defined value.
  12. A systematic procedure employed to provide the answer to a client's question about real property value.
    Begins when the appraiser identifies the appraisal problem and ends with the appraisal report.
  13. Measures the present value of the future benefits of ownership of the property.

    V = i / r r = i / v
    Where: I = annual net cash flow
    R = capitalization rate
    V = value

    The capitalization rate should be derived from the return for similar properties. ( Market derived capitalization rate)
  14. Based on the premise that an informed buyer would pay no more for a property than the cost of the land plus replacement cost of improvements less applicable depreciation.
  15. To value mineral properties several basic items are needed:
    The amount and quality of the reserves
    The extraction rate or production life
    The net value per unit extracted
    A discount rate based on investment rates

    The income approach is a good method to value mineral-producing properties.

    The discounted cash flow - net present value technique is generally used.
  16. 1. General (forces affecting property values):
    Social Economic Governmental Environmental
    2. Specific (subject property and comparables) :
    Site and improvements
    Cost and depreciation
    Income and capitalization rate
    3. Competitive supply and demand:
    The market for the subject property
    Inventory of competitive properties
    Sales and listings
  17. Mineral rights consist of the right to extract all minerals contained in or below the surface of a property. Mineral and surface rights can be separated creating a "mineral estate."
    The mineral estate represents the dominate tenant in most states, owner has the right to occupy the amount of surface area necessary to extract the minerals, but must pay the surface owner any damages.
    Minerals include: sand and gravel, precious metals, building stone, gem stones, oil and gas
  18. The value of a particular component is measured in terms of its contribution to the value of the whole property, or the amount that its absence would detract from the value of the whole.
    Relates to the cost approach and sales comparison approach
  19. 1. Allocation of value by land class or type:
    Sales of similar properties is analyzed. Price paid for each sale is allocated among various types or uses of land.
    2. Sales comparison:
    Comparison of sales of similar vacant land.
    3. Ground rent capitalization :
    Capitalization rates are derived to estimate land's contribution to property value.
  20. Land use
    Climatic conditions

    Typically, no single factor will define a region or neighborhood
    Once a region or neighborhood is defined, you can consider general conditions for the area.
  21. Of the financially feasible uses, the one that produces the highest residual land value consistent with the rate of return warranted by the market for that use is the highest and best use.
  22. the main limitation to the soil is excess water, poor drainage, wetness, high water table, or overflow.
  23. prevent (1) willful waste, (2) malicious harm to a neighbor, and (3) subsidence
  24. the amount of a certain type of property available for sale or lease at various prices in a given market at a given time.
    the amount of land suitable for a specific use, rather than the total number of available acres.
  25. landlord sharing certain operating costs with the tenant and receiving a share of the crop. The landlord and tenant may share certain fixed expenses and property charges.
  26. existing improvement should be renovated/retained so long as it continues to contribute to the total market value of the property/until the return from a new improvement would more than offset the cost of demolishing the existing improvement and constructing a new one
  27. tenant paying a stipulated rent and the landlord paying the property charges (taxes, insurance, etc).
  28. Buyer and seller are motivated by self-interest & are informed and are acting prudently.
    The property is exposed for a reasonable time on the open market.
    Payment is made in cash or in specified financing terms.
    Specified financing, was in terms that actually took place or were generally available for the property type in its locale on the effective appraisal date.
    The effect, if any, on the amount of market value or atypical financing, services, or fees shall be clearly and precisely revealed in the appraisal.
  29. The division of property rights between two or more parties.
    The holding of property by form of title.
    The right to use and occupy property as conveyed in a lease.
  30. The Court has recognized the role of the Legislature in groundwater and resource regulation.
    The Legislature has recognized UWCDs as the preferred method of managing groundwater.
  31. one mile square, there being 36 in a township.
    each is 640 acres
  32. The perception that value is created by the expectation of benefits to be derived in the future.
    Value is based on the market participant's perception of future benefits of ownership.
  33. The result of the cause and effect relationship among the forces that influence real property value.
    Change in the market for real estate due to social, economic, governmental, and environmental forces.
    Depreciation - loss in property value from any cause.
  34. use that yields the highest present land value, after payments are made for labor, capital, and management
  35. The most likely amount of money at which a property will sell (under the economic, social, and political conditions prevailing at the date of the appraisal and under conditions requisite to fair sale).
  36. Non-operating reserves are more difficult to value.
    The sales comparison approach where properties with mineral interest have sold is useful
  37. The rectangular system is based on sets of intersecting lines: Base lines, principle meridans, range, township, section
  38. Directly related to it's highest and best use.
    Often estimated separately from improvements.
    Many appraisals may require a separate valuation of land. Also, in the cost approach the value of land must be estimated and stated separately.
  39. A lease in excess of one year is required to be in writing.
    Must identify parties in a lease, identify property with reasonable certainty, state agreed rental, have beginning and ending dates, words of "conveyance" that disclose an intent to create a leasehold estate.
  40. each owner has stock in a cooperative building and receives proprietary lease and is obligated to pay rent. Title of the property is held by the co-op.
  41. Demographic composition of the population.

    Age, family size, etc.
  42. Real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium.
    Maximum benefits may be obtained when all factors of production are in equilibrium, i.E., When marginal costs equal the marginal benefits of a production input.
  43. a form of ownership of separate units or portions of buildings, that provides for formal filing of divided interest in real property. Owners have an undivided interest in common areas, with expenses for management and maintenance divided on a pro rata basis.
  44. land ownership is a fundamental american pursuit
  45. The right of government under which property is regulated to protect public safety, health, morals, and the general welfare
  46. Real property value is created and sustained when the characteristics of a property conform to the demands of its market.
    Zoning ordinances
  47. six-mile by six-mile blocks of land that are tiered within the strips formed by the range lines, each is six by six miles and is designated by consecutive numbers north or south of the base line
  48. soils have severe limitations that reduce the choice of plants or that require very careful management, or both.
  49. Analysis of the local economy, population, employment, and income.
    For agricultural properties this would relate to the economic situation in the agricultural economy.
  50. created by lines which run north and south parallel to the principle meridians. 6 miles wide. designated by consecutive numbers east or west of the principle meridian.
  51. The value of an investment to a particular investor based on his or her investment requirements
  52. social, economic, governmental
  53. the soil is limited because it is shallow, droughty, or stony, or has some other soil problem in the rooting zone.
  54. An estimate or opinion of value for an adequately described property, as of a specified date, supported by the analysis of relevant data
  55. Similar products the one with the lowest price attracts the greatest demand.
    A buyer will not pay more for one property that is equally desirable.
    Property values tend to be set by the cost of acquiring an equally desirable substitute property.
    Recognizes that buyers and sellers of real property have other options
    back bone of the sales comparison approach.
  56. all deeds, mortgages, foreclosures, and other pertinent facts that affect title to land
  57. The right of government to take private property for public use upon the payment of a just compensation
  58. The appraiser should consult public records to identify any easements, rights-of-way, and private or public restrictions that affect the subject property.
  59. The value a specific property has for a specific use. An example is agricultural use valuation for property tax purposes.
  60. The physical land and appurtenances affixed to the land
  61. Reconcile different value indications in the different approaches
    Examine strengths and weaknesses of each approach and determine why differences in values were found.
    Communicate to reader why one approach should have primary consideration
  62. few limitations that restrict use
  63. Identifies property in such terms that it cannot be confused with any other property.
    A legal description is always included in an appraisal report.
  64. Enacted in 1997.
    SB 1 combined local control with statewide oversight to develop consensus-based regional (16 planning regions) and statewide water plans.
    SB1 requires the state water plan be used as a guide for state water policy.
    SB 1 recognized Underground Water Conservation Districts as the preferred method of managing groundwater.
  65. Population characteristics such as age, family size, household income, etc.
    Presence of educational / medical / social / recreational / community services.
    Presence of commercial / agricultural services.
  66. Right to use and occupy property for a specified duration under the terms of the lease
  68. Expresses the principal of the free enterprise system
    Abnormal profits cannot be expected to continue indefinitely into the future
  69. The amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding their transaction
  70. Surface easements - rights of way
    Subsurface easements - utilities
    Overhead easement - power lines
    Access easements
    Conservation easements
  71. The ability of a product to satisfy human wants. Relates to the demand side of the market
  72. Relates to the size, shape, area, terrain, and accessibility of the land.
  73. The reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

    A fundamental concept in real estate appraisal.
  74. " to whomever the soil belongs, he owns also to the sky and to the depths."
    In Texas terms the "heaven to hell" ownership theory.
    Only state in the western US which applies absolute ownership to govern the capture and use of groundwater.
  75. Cost Approach
    Sales Approach
    Income Capitalization Approach
  76. Run North and South, Arbitrarily located along base lines
  77. results when the bundle of rights is divided by a lease.
    A lease is both a contract and conveyance. It is a conveyance by which the landlord gives the tenant the right to occupy the property for the term specified by the lease. It is a contractual obligation on the tenant to pay rent to the landlord, and may contain other promises and agreements between the landlord and tenant.
  78. convey use but not ownership
    Surface easements - rights of way
    Subsurface easements - utilities
    Overhead easement - power lines
    Access easements
    Conservation easements
  79. The most probable price as of a specified date, in cash, or other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
  80. The interaction of the supply and demand relationships for real estate in price determination.
    Relates to the factors of value - utility, scarcity, desire, and effective purchasing power.
  81. The instrument that transfers title in real property

    The seller is guaranteeing that the title is free and clear of encumbrances
  82. Residential




  83. Ownership interest held by the landlord with the right of use conveyed to others
  85. Impose private restrictions on the use of the land
    (e.g. residential subdivisions including stipulations on single-family residence, minimum square footage)
  86. used in place of an abstract
  87. Soils are the basic component of value in agricultural properties.
    Soils are the medium of productive capability.
    The use and management of the soil determine the profit that can be realized from agricultural production.
    Every appraisal of property that is used for agricultural production should have a full description of the soils on the property.
  88. The right of government to raise revenue through assessments of goods, products and rights
  89. Restrictions on the use of the property that are recorded and attached to the deed (e.g. mineral rights, rights-of-way, ag use only for a specified period)
  90. The purchaser's wish for an item. Demand side of the market
  91. Used to establish a security interest in real property
    It is a three party instrument: Lender, Borrower, Trustee
  92. the sale of either limited ownership interest in, or the rights to use and occupy, residential apartments or hotel rooms.
  93. The identification and study of the market for a particular economic good or service.
    Forms the basis for determining the highest and best use of a property.
    Market value of a property is largely a function of its competitive position in its market
    Provides an appraiser with information about current building costs and market conditions for use in the cost approach.
    Helps identify competitive properties and their degree of comparability in the sales comparison approach.
    Provides information used to determine the anticipated lease or rental rate of a property, future income flows, and appropriate discount rate to apply in the income approach.
  94. Political and legal actions.
    Public services, zoning, building codes, etc
  95. Subsurface rights
    Air rights
  96. Total rights of use, occupancy, and control, limited to the lifetime of a designated party.
    transfer ownership while retaining use and control for the life of the grantor.
    The income stream flowing to the life tenant is normally the basis of valuing
  97. In the context used in appraisal cost refers to the cost for production not exchange.

    A price paid in the past, or the amount needed to construct a building today.
  98. Productivity ratings are essential to the appraisal of agricultural properties.
    Various methods may be used to arrive at some estimate of relative productivity of properties.
    Land capability class ratings and yield indexes may be used to estimate productivity
  99. Added to the Texas Constitution in 1917.
    Declared that conservation of the state's natural resources, including water, are public rights and duties.
  100. Appraisal process is complete with final opinion of value subject to stated assumptions and limiting conditions
    Appraisal assignment is not complete until final opinion is delivered to client in written or oral report.
  101. A survey system which measures and identifies land by describing property boundaries.
    Based on distances and bearings from succeeding reference points around the perimeter of the real estate. describes the boundary of the property in a clockwise or counterclockwise direction form the point of beginning.
    The Point of Beginning (POB) is the survey reference point which is tied into adjoining surveys.
    Metes refer to distances. Bounds refer to the bearing from the true north and south line.
  102. the main limitation is risk of erosion
  103. Enacted in 2001.
    Continued the focus on water planning and management by the creation of new UWCDs and a streamlined process for landowners to create a district.
    Premise is that water management must become more cohesive and less fragmented.
    Added to districts' permitting authority to impose more restrictive permit conditions on new permit applications.
    Strengthened districts' authority to regulate spacing and production.
    Authorized districts to impose a reasonable fee on groundwater transported out of the district.
  104. Also known as "lot and block system"
    Applies in most urban communities.
    A tract of land is surveyed and platted into rectangular blocks and lots.
    Each block and lot is numbered for identification.
    Copies of the plat are filed in the county recorder's office for permanent reference.
  105. 1. Identification of the real estate.
    2. Identification of property rights to be valued.
    3. Intended use and users of the appraisal.
    4. Definition of value.
    5. Date of value estimate.
    6. Description of scope of appraisal.
    7. Other limiting conditions.
  106. Investors will seek to select investments that provide the highest rate of return at the lowest level of risk.
    Related to principle of substitution & relative to the income approach.
    Significant in estimating the rates of return required to attract capital.
    The capitalization rate is the indicated required rate of return by the market for the type of property being appraised
  107. One section = 640 acres = One square mile
    One acre = 43,560 square feet
    One mile = 5,280 ft.
    One labor = 177 acres
    One vara = 33.33 inches
    One chain = 66 ft.
    One acre is 10 sq. Chains
  108. The present or anticipated supply of an item relative to the demand. Relates to the supply side of the market
  109. Efficient Market: prices reflect all available relevant information, large numbers of buyers and sellers who create a competitive market, buyers and sellers are knowledgeable and fully informed about market conditions.
    Imperfections such as the lack of product standardization, and the time required to produce new supply, make it difficult to predict the behavior of real estate markets accurately
  110. Run east and west, established on true parallels of latitude
  111. A contract that gives a tenant (lessee) the right to possess and use property owned by a landlord (lessor)
  112. the chief limitation is climate that is too cold or too dry.
  113. Market characteristics such as income, employment, availability and cost of credit, etc.
  114. soils generally are not considered suitable for cultivation. These soils are likely to erode, but have other limitations, impractical to remove, that limit their use.
  115. the amount of a type of property desired for purchase or lease at various prices in a given market at a given time. values are most affected by current demand
  116. 1. Enter and use
    2. Sell, lease, or give away specified ownership rights
    3. Can elect to exercise all or none of the rights
    4. Mineral, water, air, development rights
  117. A landowner has a right to take for use or sale all the water that he can capture from below his land as long as the water is beneficially used and isn't intentionally wasted or negligently result in the subsidence of neighboring lands.
    "law of the biggest pump"
  118. soils that have severe limitations that make them unsuitable for cultivation or commercial crop production.
  119. Parties to a contract must be legally competent
    Subject matter must be legal and proper
    Must be evidence of an offer and an acceptance
    Must be consideration
  120. The right of government that gives the state ownership of a property if the owner dies without a will or any ascertainable heirs
  121. Developed by the soil conservation service.
    Based on the limitations of the soil rather than potential yield.
    It indicates the general suitability of soils for most kinds of crops.
  122. The seller is agreeing only to convey any interest in the property, but not guaranteeing that the property is free of encumbrances by others
  123. anticipation, change, supply and demand, competition, substitution, opportunity costs, balance, contribution, surplus productivity, conformity, externalities, highest and best use,
  124. based on the relative productive capacities of different soil types.
    It is a relative index in that it is calculated using a base soil type.
    Calculated for different properties may be compared to determine their relative productivity.
    It is important to use the same base soil type to calculate the indexes for there to be comparability.
  125. Enacted in 2007.
    Created current environmental flows process and established the Environmental Flows Advisory Group to oversee implementation.
    Called for TCEQ to adopt recommendations in the form of environmental flow standards to be used in the decision-making process for new (and amended) water right applications and to establish an amount of unappropriated water, if available, to be set aside for the environment.
  126. have broad authority to regulate groundwater use & production.
    Limit production based on tract size to conserve, preserve and protect groundwater.
    Curtails the rule of capture's doctrine allowing small tract landowners the right to pump as much water as a large tract owner.
  127. Co-tenancy rather than division of interests.
    Tenancy in common - an estate held by 2 or more persons, each of whom has an undivided interest
  128. process under which lenders exercise their rights to have security sold and the proceeds applied to the outstanding loan balance
  129. The indicated required rate of return by the market for the type of property being appraised. Opportunity Cost
  130. Identifiable portable and tangible objects that are considered to be personal and not permanently affixed to the real estate
  131. Zoning and other regulations,
    Master plans,
    Environmental impacts,
    Transportation systems,
    Taxes assessments and rates for local and state entities,
  132. All uses that can be expected to yield a positive return. The net return is after allowance for a required rate of return on the invested capital.
  133. Collection of pertinent data.

    Inspection of the subject property, comparable sales, the area and neighborhood.

    Organization and analysis of the data to arrive at a value opinion for the subject property.
  134. a claim or encumbrance on a property
  135. land is a source of wealth and an object of value
    it is: Unique in location and composition, Physically immobile, Durable, Supply is finite, has use
  136. Anticipation of benefits to be obtained in the future. Represents the monetary worth of property, goods, or services to buyers and sellers.
  137. Surrounding land uses are not always indicative of optimum use. Current zoning may not be consistent with a property's highest and best use. Legal non-conforming use - use that is lawfully established, but no longer conforms to the use regulations of the zone.
    Is agricultural use a long-term or interim use.
  138. Reserves are the volume of accessible mineral material of acceptable quality that will produce a return, after operating expenses, under present economic conditions.
    Reserves may be classified as:
  139. All property rights; Absolute ownership, unencumbered by any other interest and subject only to limitations imposed by the government
  140. Market Value
    Value in Use
    Tax or Assessed Value
    Other Value Estimate
    Investment Value
    Going-Concern or Business Value
    Retrospective Value
    Prospective Value
    Liquidation Value
    Insurable Value
  141. Operating units with delineated reserves
    Analysis of sales of similar properties is the most desirable method for valuing minerals; however, it is often difficult to perform because minerals are seldom sold apart from the surface.
    Appraisers typically estimate leased fee value or the contribution to the surface estate if the minerals are being leased.
  142. All interest, benefits, and rights inherent in the ownership of physical real estate
  143. Give others the right to use the owner's land for a specific purpose. Are attached to the property and transferred to the new owner
  144. Differentiated by (1) Geographic location Neighborhood, city, region, (2) Type of real estate
  145. The ability of an individual or group to participate in the market. Demand side of the market
  146. exclusive, but not absolute
  147. The net income that remains after the costs of various agents of production have been paid.
    Agents of Production: Land, Labor, Capital, Management
    Relates to the income approach.
  148. Size, Frontage, Topography, Location, View, Availability of utilities
    For agricultural properties:
    Soil - productivity
    Water - irrigation, stock water
    Topography - slope
  149. Utility, Desire, Scarcity, Effective Purchasing Power
  150. legal: property rights
    economic: value
    social: land ownership is a fundamental american pursuit
  151. have severe limitations that reduce the choice of plants or that require, special conservation practices
  152. give the landowner greatest possible freedom to decide land use, ex; easements, zoning, regulations