Real estate appraisers must consider the impact of local governments’ comprehensive plans when producing appraisals, according to an article published in The Appraisal Journal’s summer issue.
“This collection of articles from various authors with differing points of view presents all sides of this somewhat controversial topic and will help appraisers develop their own methods for addressing the separation of tangible and intangible assets in their professional work,” Appraisal Institute President Joseph C. Magdziarz, MAI, SRA, wrote in the book’s foreword, adding, “This new second edition will help bring appraisers up to date on this important 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.
For more information, visit www.appraisalinstitute.org.
