1. Property Inspection and Analysis: The Site Basic Real Estate Appraisal: Principles & Procedures – 9 th Edition © 2015 OnCourse Learning Chapter #6

2. STUDENT LEARNING OUTCOMES List Three Reasons for making Site Inspections List Four Criteria for Highest & Best Use List the Three Main Categories of Site Information Calculate the Area of a Square, Rectangle, Triangle, Trapezoid & Circle 2 Page 146 © 2015 OnCourse Learning

3. 6.1 PREPARING TO INSPECT THE SITE Reasons for Inspecting the Site Highest and Best Use Estimate The land use that will support its highest value (covered in more detail later) Identify Key Features Physical Characteristics Site Location Elements Public and Private Restrictions Identify Possible Legal or Physical Problems 3 Page 147 © 2015 OnCourse Learning

4. POSSIBLE LEGAL PROBLEMS Non-Conforming Use Encroachment Unrecorded Easement Notify Client if Undisclosed Problems are Discovered – and Clearly Disclose in the Report 4 Page 148 © 2015 OnCourse Learning

5. POSSIBLE PHYSICAL PROBLEMS Flood Risks Poor Soils / Settlement Environment Hazards Discovered Problems May Change the Scope of Work – and May Require an Expert 5 Page 148 © 2015 OnCourse Learning

6. WHAT DATA & TOOLS ARE NEEDED? Sales History of Subject Three Years History Prior to Value Date (USPAP) Site and Neighborhood Data Plat Map, Flood map, Aerials, Title Report Data Sources Gov’t Websites, FEMA, Zoning Tools and Equipment Checklist/URAR, Laptop/Tablet, Measuring Device, Camera, Maps, GPS 6 Page 149 © 2015 OnCourse Learning

7. SITE DESCRIPTION – URAR FORM 7 Page 152 © 2015 OnCourse Learning

8. 6.2 HIGHEST & BEST USE ANALYSIS Uniform Standards of Professional Appraisal Practice... Requires Highest and Best Use Analysis if estimating an opinion of Market Value Alternatively defined as… The reasonable and profitable use that will support the highest land value as of the date of value 8 Page 153 © 2015 OnCourse Learning

9. HIGHEST & BEST USE ANALYSIS (Con’t.) Purpose – H&B Use helps define the… Basis of Data Collection Appraisal Methodology Alternative Use Assumptions Highest and Best Use As if Vacant Highest and Best Use As Improved 9 Page 153 © 2015 OnCourse Learning

10. AS IMPROVED (Example 6.1) 10 Page 155 © 2015 OnCourse Learning

11. INTERIM USE (Example 6.2) The analysis suggests that the residential use (as improved) may be determined to be an Interim Use until commercial land values increase above $350,000 (value as improved). 11 Page 156 © 2015 OnCourse Learning

12. HIGHEST & BEST USE CRITERIA The Four Accepted Tests for H&B Use… Physically Possible Legally Permissible Economically Feasible Most Productive (Profitable) 12 Page 156 © 2015 OnCourse Learning

13. 6.3 MAJOR CATEGORIES OF SITE INFORMATION Physical Characteristics Site Location Elements Public and Private Restrictions Detailed on the following slides 13 Page 157 © 2015 OnCourse Learning

14. PHYSICAL – SIZE AND SHAPE Size Usually in Square Feet or Acres One Acre = 43,560 Square Feet Assemblage or Plottage Joining of two or more parcels May or May Not increase value (Plottage Value) Gross vs. Useful Area (Net) Building Footprint or Coverage Ratio Lot Shape (Width vs. Depth) Frontage and Excess Depth 14 Page 158 © 2015 OnCourse Learning

15. PHYSICAL – TOPOGRAPHY Irregular Topography Hills, Valleys, Ravines, Cliffs, Bluffs and Slopes May be an Asset – Premium Views May be a Liability – Higher Utility, Access and/or Development Costs Orientation to Surrounding Uses. 15 Page 160 © 2015 OnCourse Learning

16. PHYSICAL – SOIL AND GEOLOGY Soil Stability – Rock vs. Sand Soils Composition Ability to absorb moisture Affect on Septic Systems Potential Hazards Slide, Soil Liquefaction or Earthquake 16 Page 161 © 2015 OnCourse Learning

17. PHYSICAL – DRAINAGE AND FLOOD Appraiser Should Note the Water Drainage Pattern (Run-Off), Signs of Excessive Soil Erosion Flood Maps/Flood Plain (Hazard Area?) - Is Flood Insurance Required? 17 Page 161 © 2015 OnCourse Learning

18. PHYSICAL – ENVIRONMENTAL FACTORS Radon and Methane Gas Hazardous Wastes Lead Paint Former Oil Fields Toxic Wastes 18 Page 161 © 2015 OnCourse Learning

19. PHYSICAL – FORM OF OWNERSHIP * Conventional Detached Lot Common Interest Development (CID) Planned Unit Development (PUD) Airspace Condominium * This does not mean the legal form of holding title 19 Page 162 © 2015 OnCourse Learning

20. PHYSICAL – LOT TYPE & ORIENTATION Figure 6.8 20 Page 164 © 2015 OnCourse Learning Courtesy of CalBRE

21. PHYSICAL – ON-SITE & OFF-SITE IMPROVEMENTS On-Site Improvements Earth Leveling, Grading, Fill, Drainage, Compaction or Excavation Off-Site Improvements Widening and Paving of Streets, Curbs, Gutters, Sidewalks, Alleys, Street Lights and Parking Facilities 21 Page 167 © 2015 OnCourse Learning

22. ANALYSIS OF SITE LOCATION ELEMENTS Evaluation of the Neighborhood Convenience to Schools, Hospitals and Community Centers Proximity to Employment and Shopping, and to Medical and Recreation Facilities Market Appeal of Neighborhood 22 Page 168 © 2015 OnCourse Learning

23. ANALYSIS OF SITE LOCATION ELEMENTS Proximity to Earthquake, Flood and Environmental Hazards Comparison with Neighborhood Properties Utilities (Availability and Reliability) Transportation 23 Page 168 © 2015 OnCourse Learning

24. PUBLIC RESTRICTIONS Regional and Master Plans Zoning Regulations Subdivision Laws Building and Safety Regulations Right of Access Environmental Protection Laws Federal Flood Zones Geological Hazard Zones 24 Page 172 © 2015 OnCourse Learning

25. PROPERTY TAXES Ad Valorem - “According to Value” Direct or Special Assessments / Levies Property Tax Exemptions Property Transfer Tax 25 Page 174 © 2015 OnCourse Learning

26. PROPERTY TRANSFER TAX Example Rate of $0.55 per each $500 of new money (Equates to $1.10 per $1,000) Hence – Tax ÷ 0.0011 = Price If Stamps are $209.00… $209.00 ÷ 0.0011 = $190,000 26 Page 175 © 2015 OnCourse Learning

27. PRIVATE RESTRICTION Deed Restrictions Association Agreements (CC&R’s) Private Easements Leases 27 Page 176 © 2015 OnCourse Learning

28. 6.4 COMPUTING AREA & VOLUME Length Length Area of Square = Length X Length (L 2 ) Area of Rectangle = W X L Example If W = 50’ and L = 100’, what is area of the shape? 50’ X 100’ = 5,000 Square Feet (SF) 28 Page 178 © 2015 OnCourse Learning Width Length

29. COMPUTING AREA & VOLUME (Con’t.) Second Bullet should be 28 29 Page 180 © 2015 OnCourse Learning

30. CHAPTER SUMMARY Site inspection is one of the most important parts of the entire appraisal process. Three major reasons of inspecting the site are: 1.Estimate Highest and Best Use 2.To Identify Key Site Features 3.To Identify Possible Legal and Physical Problems It is desirable to have certain kinds of information before the site inspection begins. 30 Page 185 © 2015 OnCourse Learning

31. CHAPTER SUMMARY (Con’t.) The tools and equipment necessary to perform the inspection were outlined. During the inspection, the appraiser should first investigate the physical characteristics of the site. Physical characteristics also include the form of ownership, type of lot, its orientation, and physical access. The improvements made to the site (on-site) or on areas surrounding it (off-site) must be noted. 31 Page 186 © 2015 OnCourse Learning

32. IMPORTANT TERMS & CONCEPTS AccessFlag Lot AssemblageFrontage Association AgreementGross Area Building FootprintHighest and Best Use Common Interest Development (CID)Interim Use CondominiumInterior Lot Corner LotKey Lot Coverage RatioLocation Cul-de-sac LotLot Shape DepthLot Type Excess DepthNet Area 32 Page 188 © 2015 OnCourse Learning

33. IMPORTANT TERMS & CONCEPTS Off-Site ImprovementsRight of Access On-Site ImprovementsT-Intersection Lot OrientationTopography Planned Unit Development (PUD)Townhouse PlottageTransportation Plottage ValueUseful Area Private RestrictionsUtilities Public Restrictions 33 Page 188 © 2015 OnCourse Learning