Rural Property Valuation & Methodologies Flashcards
7 cards from real ARA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Rural Property Valuation & Methodologies flashcards as text
How does the presence of USDA Farm Service Agency (FSA) base acres on a farm affect its appraised market value?
Answer: Base acres can add value because they convey with the land and enable eligibility for program payments
FSA base acres transfer with the property and maintain the buyer's eligibility for commodity program payments, which the market often capitalizes into land prices.
An appraiser is adjusting a comparable farm sale that is superior to the subject in soil productivity. The direction of adjustment to the comparable is:
Answer: Downward, because the comparable's price must be reduced to reflect the subject's lower quality
When a comparable is superior to the subject, the appraiser adjusts the comparable's price downward to simulate what it would have sold for if it had the subject's characteristics.
Which USPAP requirement mandates that an appraiser disclose any prior services performed on the subject property within a specified timeframe?
Answer: Standard 1, Rule 1-2(f)
USPAP Standard 1, Rule 1-2(f) requires the appraiser to identify and disclose any prior services on the subject property within three years preceding the assignment.
What is 'effective gross income' (EGI) in the context of an agricultural income analysis?
Answer: Total potential gross income minus vacancy and collection loss
EGI is derived by subtracting an allowance for vacancy, idle land, or collection loss from potential gross income, representing what the property actually generates.
When valuing rural properties with water rights in the western United States, which legal doctrine typically governs ownership and transferability?
Answer: Prior appropriation doctrine — 'first in time, first in right'
Most western states follow the prior appropriation doctrine, where senior water rights holders have priority over junior holders, and rights can often be sold separately from land.
A transitional rural property is located at the edge of a growing metro area. Which highest and best use scenario MOST likely applies?
Answer: Speculative holding for future residential or commercial development
Transitional rural properties near expanding metro areas often have a highest and best use of holding for near-term conversion to residential or commercial use, which the market prices into the land value.
Under the sales comparison approach, a 'time adjustment' (or market conditions adjustment) is applied when:
Answer: Market prices have changed between the comparable's sale date and the effective appraisal date
A time/market conditions adjustment is warranted whenever market prices have risen or fallen between the comparable's sale date and the effective date, not merely because time has passed.