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Farm Appraisal V. BPO

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Terrel L. Shields

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May 2, 2002
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Certified General Appraiser
State
Arkansas
Interesting copies I got for an appraisal and BPO. The property is in the Arkansas River Valley. Client needs value of minerals after retaining minerals. It was appraised by the "seller" who was donating the property to a charity. It involved something north of 320 acres. The charity obtained a BPO several months later, and the property sold a few months after that spot on the BPO. They sent me both for the copies of the tax cards and legal descriptions.

The BPO had predicted a significantly lower value ($939K v. a range from $675K-$750K predicted by the BPO) and the property sold for $752,000. Hmm. The appraisal was 44 pages and looks "fine". The BPO was 14 pages and had the benefit of a copy of the appraisal. Both agreed upon the four best comparable sales in the area.

The BPO was prepared by a broker specializing in agri-timberland property. They predicted that the appraisal had under estimated the impact of old strip mines. The appraiser recognized the reclaimed land and the two large ponds created (about 3 acres each I am guessing). But he felt it was sufficiently fertile to support grazing and the sales available were similarly situated but none had been impacted by an old strip mine. The BPO suggested that the impact was greater and the land was poor and would not support as many cattle as the appraiser may have thought. They also felt that the land was too poor to attempt a tree growing operation which is of some value in the region. Hmm. Neither had any support to make an adjustment.

But I was impressed by the BPO. I thought perhaps the preparer was also an appraiser, but they were not listed as same on the state website. Again, I have no fault with the appraisal and he lived closer to the area than did the Broker, who was from 90 miles away. But clearly he underestimated the impact of the old strip mine lands.

FYI - this was mined many years ago - from about 100 to 50 years ago. Very little mining has occurred in the area since the 1960s, the late Senator Dale Bumpers was instrumental in getting reclamation money and few of the old (orphan spoils) piles remain in the region. Much of it however had not saved the topsoil. So the reclaimed land is basically lacking in organics. It grows some grass and few of us who are not familiar with the area would recognize it as anything unusual. I think you would need some reclaimed land sales to estimate a difference in value between reclaimed and natural soil...it won't be too obvious otherwise. And without supporting reclaimed sales and were there any to be found in years??? the appraiser had no leg to make an adjustment. Catch 22.
 
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Meandering

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Feb 26, 2006
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Real Estate Agent or Broker
State
Pennsylvania
They did a bang up job reclaiming Blue Mountain, which was bone dry rocks, looked like the moon, lots of parent material. Oh, but raw sewage works wonders.



Previous attempts to revegetate Blue Mountain using conventional reclamation
methods were unsuccessful. The difficulty in reclaiming a site such as Blue Mountain
lies in the combination of physical extremes (steep slopes, eroded soil, and high winds)
and chemical and biological factors (heavy metal toxicity, micro- and macronutrient
deficiencies, and absence of microbial activity).

HRD proposed to use a combination of limestone, potash, municipal wastewater
biosolids and power plant fly ash as a soil amendment (the combination was later
termed “Ecoloam”), and then to hydroseed and hydromulch appropriate metals-tolerant
species of vegetation. HRD would blow the amendments onto the soil surface because
the near-vertical slopes, rocky surface, and tree-littered landscape of Blue Mountain,
precluded incorporation of the amendments into the soil.

https://clu-in.org/conf/tio/ecoresources3/resources/CarbonPA.pdf

So, when watching the entire process with a non-scientific point of view.... yes, their potted plants too root, but before that, strawberries and watermelons sprung up, as those seeds don't break down in the human digestive tract, but love the nearby bio-solids and sunshine.

Maybe I'll take some pictures next time I'm there.

.
 

Sid Holderly

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Jun 16, 2005
Professional Status
Certified Residential Appraiser
State
Indiana
Poo is a good go juice if you keep the heavy metals down. A contractor here skims the top 8' to 12" off of fair to average small cropland spots and used it for topsoil in new yards. The excavated cropland is then tilled and leveled if needed and sold as building lots or farmland. It takes years for this land to be productive again. Only the locals know the history of several sites. Freshly tilled (ripped & leveled) scrapped sites are worth about half (recreational land value) compared to farmland value. A couple I know of sold at about 3/4 of farmland value.
 

NachoPerito

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Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
A specialized broker usually is better than a do-anything appraiser on determining value.
I am ok to admit that.
On the other hand, we are the only guarantee of an unbiased 3rd party.
 

Eli

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May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
The appraiser should have got with other brokers and government officials or other sources to find data.
 

Terrel L. Shields

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Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
specialized broker usually is better than a do-anything appraiser
True, but...
Only the locals know the history of several sites. Freshly tilled (ripped & leveled) scrapped sites are worth about half
The appraiser recognized it as reclaimed. The problem I see is the broker recognized the issue and pfa an adjustment based on his experience. The appraiser did see the issue but found no market support for an adjustment. So he went to the low range of sales, but didn't "adjust".

This is where fear of not having a sale to support the adjustment may have colored his thinking. In hindsight I think I would have searched further away for a comp that had reclaimed land, or interviewed local ag appraisers and brokers for their opinion.
 

NachoPerito

Senior Member
Joined
Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
True, but...
The appraiser recognized it as reclaimed. The problem I see is the broker recognized the issue and pfa an adjustment based on his experience. The appraiser did see the issue but found no market support for an adjustment. So he went to the low range of sales, but didn't "adjust".

This is where fear of not having a sale to support the adjustment may have colored his thinking. In hindsight I think I would have searched further away for a comp that had reclaimed land, or interviewed local ag appraisers and brokers for their opinion.

This is where the logic "if you can't prove the adjustment the adjustment is zero" gets you into trouble.
 

Michigan CG

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Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
I am currently working on 24 tax appeal cases with most of the properties being farm land. The other side is using a broker for BPOs. One of the properties is only 6 acres. The broker used 22-32 acre parcels as comps as far away as 30 miles. I doubt the guy knows what loam or drain tile is.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
I am currently working on 24 tax appeal cases with most of the properties being farm land. The other side is using a broker for BPOs. One of the properties is only 6 acres. The broker used 22-32 acre parcels as comps as far away as 30 miles. I doubt the guy knows what loam or drain tile is.
Is farmland assessed based on market value in Michigan?
 
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