conservation easement appraisals

[larryhaskell]

I may have a chance to complete some conservation easement appraisals. I know I have to use the Yellow Book ( I have a copy) and follow IRS guidelines which I have done before but I was wondering if anyone has any suggestions for other references that could be helpful.

I need to add that it is my understanding that the property owners are paid the value of their property based on the appraisal but they retain ownership and can continue to farm the property. The easement just restricts the development of the property for other uses such a housing. This easement stays on the property even if its sold.

Thanks in advance.

 

[lax2010]

You may want to check into the seminars/courses offered by the Appraisal Institute. Some may be taken on-line.

 

[Financially Feasible]

I may have a chance to complete some conservation easement appraisals. I know I have to use the Yellow Book ( I have a copy) and follow IRS guidelines which I have done before but I was wondering if anyone has any suggestions for other references that could be helpful.

I need to add that it is my understanding that the property owners are paid the value of their property based on the appraisal but they retain ownership and can continue to farm the property. The easement just restricts the development of the property for other uses such a housing. This easement stays on the property even if its sold.

Thanks in advance.

Larry,

Is this a federal acquisition? It is my understand that the Yellow Book is only for that type of taking.

As has already been said, the AI offers a class on appraising conservation easements. I've heard that it's pretty comprehensive.

Here are some interesting links that you might want to check out:

http://www.nevadacountylandtrust.org/index.php/lands/conservation-easements/

http://www.nature.org/wherewework/northamerica/states/nevada/success/art11319.html

 

[stefan olafson]

Be extremely careful, take a look at enforcement actions in Colorado. A number of appraisers there did a very poor job with valuing the property and the state took them to task!

Yes, you have to do a 'yellow book' or a before and after valuation of the property. It's sometimes very difficult to value the after because all you are valuing is the restrictions placed on the property by the easement.

The AI and ASFMRA have a very good class on this subject, I would suggest you take it prior to getting too far into the process.

 

[Kali the Boston Terrier]

I may have a chance to complete some conservation easement appraisals. I know I have to use the Yellow Book ( I have a copy) and follow IRS guidelines which I have done before but I was wondering if anyone has any suggestions for other references that could be helpful.

I need to add that it is my understanding that the property owners are paid the value of their property based on the appraisal but they retain ownership and can continue to farm the property. The easement just restricts the development of the property for other uses such a housing. This easement stays on the property even if its sold.

Thanks in advance.

Stop what you are doing. You need to bring on a mentor to help you through these. One, please read the Pension Act of 2006, there are specific provisions about Conservation Easement Appraisals prepared for Income Tax purposes. If you do not meet them, do not do them! IRS has decided that conservation easements are the hot bed for fraud. As a result many of the returns are automatically flagged for audit, the biggest item of contention is the appraisal. I had an IRS engineer tell me off the record, that it is incorrect to say some of the returns are audited...all of them are, at least the appraisal portion is. You need to take the AI, ASA, ASFMRA Conservation Easement Class...without that you may still be thinking its just a formatting issue.

If the report is for acquisition purposes by the Fed, State, or local unit of Gov't, YellowBook is the correct method given sooner or later Federal Funds will be used to reimburse. However if it is a donation to a land conservancy, and the owner is looking to get the donation amount written off the taxes, then it is subject to the IRS Circular of donated property and reinforced by the Pension Act of 2006 requirements.

IRS is a whole different can of worms, quid pro que agreements...definition of larger parcel....related interests...etc.

Moral of the story, this is not a niche you can pick up without some serious heavy lifting first. As my friend TE says...you do not know, what you do not know.

 

[rbrienza]

Larry,

Please be very careful.... it is worst than a hornets nest.... as stefan said in Colorado we have had some very interesting enforcement actions by our board...
I would call Harold at our state division (DORA) http://www.dora.state.co.us/real-estate/ to give you an idea where to start. I know you are in a different state but he would be a resource.

- Ray

 

[Terrel L. Shields]

Charge accordingly too...

 

[Stone]

Larry - I sent you a PM. I agree with Kali's advice, but here are a few more quick thoughts:

The certificate course that all the orgs put on is a good place to start for education. If you aren't familiar with these, it really helps with understanding the difference between the larger parcel, CFOP, etc. It also helps you get an idea of what standards you are using and for what.

Second, if you get these, make sure do as Terrell says and charge accordingly. Further, make sure you give yourself a LOT of time as they will take a lot of it. Your first few will take much longer than you likely think.

Third, you really need to know who will be using these. Yellow Book does not apply if it is just a donation and no government entity is involved. However, many non-profits who purchase conservation easements cost-share with government entities and they sometimes are required to have the appraisal done using the Yellow Book standards in order to receive their funding. If this is more than just a donation, you really need to know everyone who is using the report and what they expect.

And, to re-state what Kali wrote, it is really important to work with someone who has done these if at all possible.

As noted, you need to be careful with how you do these. However, if you learn what you are doing they are a good source of income.

 

[TianaR]

I have done alot of convservation easements. PM me if you have any questions.

 

[redfish]

I took the AI introduction class to conservation easement appraisal here in MI which was just 7 hours. The class to gain the AI certification in CEA was a full week if I am not mistaken. There were a load of people in the intro class that had already completed CEAs "that did not know what they did not know" and walked out of the intro class looking a little green in the gills with a cold sweat on their brow.