Thirty percent of a site lies within a regulated wetland. How should the appraiser treat that area?
Correct Answer
C) Analyze its restricted utility and contribution to the whole
Identify the wetland’s actual restrictions and contribution to the whole property using reliable market and specialist information. Keep the legal acreage accurate. Do not assume fill approval from mere possibility or apply an automatic percentage loss; restricted area can still contribute amenity or other utility.
Why This Is the Correct Answer
Option C is correct because the appraiser must identify the applicable restrictions and interpret their impact on utility and value. The wetland area has restricted utility, but it may still contribute amenity, open space or other value, so its contribution to the whole property is analyzed rather than assumed.
Why the Other Options Are Wrong
Option A: Apply the unrestricted buildable-area rate without analysis
Option A is wrong because applying the unrestricted buildable-area rate without analysis ignores the regulatory restrictions that limit how the wetland can be used.
Option B: Remove the wetland acreage from the legal parcel description
Option B is wrong because the appraiser does not remove wetland acreage from the legal parcel description. The legal acreage stays accurate, and the restriction is addressed through analysis of utility and value.
Option D: Assume fill permission because a buyer requests it
Option D is wrong because a buyer's request does not establish that fill permission will be granted. Assuming approval without support overstates the wetland's utility.
Restricted, not erased
Wetland acreage is restricted, not erased: it stays in the legal description and is valued for what it can actually do.
How to use: Use this phrase when a question asks how to treat wetlands, easements or other restricted areas.
Exam Tip
Prefer the answer that calls for analysis of actual restrictions and contribution over answers that ignore or assume away the restriction.
Common Mistakes to Avoid
- -Valuing wetland area at the full buildable rate
- -Assuming permits will be granted
- -Treating restricted acreage as having zero value without market support
Concept Deep Dive
Analysis
This question tests how an appraiser handles a legally restricted portion of a site. The appraiser identifies the actual restrictions on the wetland area and analyzes how they affect its utility and its contribution to the whole property, using reliable market and specialist information.
Background Knowledge
Regulatory restrictions such as wetland protections can limit development on part of a site. The appraiser identifies the restrictions, gathers market and specialist information, and estimates how the restricted area affects the whole property's utility and value. There is no automatic percentage loss; the effect depends on the market.
Real-World Application
An appraiser values a 20-acre tract where a wetland delineation shows part of the land is protected. The appraiser reviews the delineation, consults market sales of similarly encumbered tracts and values the restricted area for its limited uses, such as open space or buffer.
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An appraiser is valuing a vacant site near an oil refinery. A comparable vacant site that is not near a refinery sold for $670,000, and paired land sales show a $130,000 discount for refinery proximity. No other adjustments apply. What land value is indicated for the subject?
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A cash-equivalent vacant-site sale of $990,000 has 90 front feet. Market analysis supports applying its rate per front foot to an otherwise matched 78-front-foot subject. What indication results?