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Arizona Department of Agriculture Industrial Hemp Program
County Assessor Land / Agriculture
What is Land?
Land is defined as the earth's surface, both land
and water, plus natural resources in their original state, such as: mineral deposit,
wildlife, fish, timber, and water.
Property rights in land are established on the theory
that the rights in fee simple ownership normally include the rights to:
- Give away
- Enter or Leave
- Do nothing at all
There are several characteristics of land that are commonly
- Land is a non-wasting asset
- Land cannot be moved
- The supply of land is limited
- Each parcel of land is unique
- Land is useful to people
Land Value is an economic concept
resulting from an understanding of these characteristics, in that two of the four
factors that create value (utility and scarcity) are present within these characteristics
and, when combined with desire and transferability, form the basis for value.
Raw Land is defined as land in its
natural state (untouched).
Waste Land is land that is unusable.
Vacant or Unimproved Land is land
that lacks the essential, functional improvement to make it useful.
Site is defined as land that has
been made ready to use for its intend purpose.
Situs is the actual physical location
of a property (often the street address).
Legal Description is a description
of property that identifies it according to a system established or approved by
Units of Comparison
It is often necessary to analyze the differences in size
and shape of comparable sale properties in order to apply uniform methods of valuation.
To directly compare sites of varying size and shape, the appraiser must find a common
denominator, or unit of comparison, that will permit him to compare the properties
fairly. This unit of comparison should also be able to maintain equity and uniformity
for similar properties in different parts of a city or county. Several basis units
of comparison to value land:
Front Foot or Frontage
is a strip of land one foot wide, fronting on the street, water,
railroad or other frontage, and continuing to the rear of the parcel.
This method is useful in valuing commercial retail property, warehousing
or industrial property fronting on a railroad siding, or parcels
fronting on golf courses or bodies of water.
Square Foot is that
square foot of land, no matter where located in the parcel, is equal
to any other square foot in the parcel. This method can be used
to value residential, commercial, small industrial sites, and irregularly
Acre is in theory
and computation is similar to that of the square foot method. This
method is used in valuation of large industrial sites, shopping
centers, rural and farm properties.
Site or Lot assumes
that each site (or lot) in a particular subdivision or area is relatively
equal to all others in the same group. This method is often found
in residential subdivisions, but may also be useful to value sites
located in industrial parks.
Unit(s) or Buildable
should be used when the market indicates that value is derived by
how many living units can be constructed within a given area, as
with an apartment property. In using this method, consideration
must be given to market demand and zoning ordinances.
Animal Units or Crop Capacity
are other method of units of comparison, used primarily in the valuation
of agricultural property. Value calculations are similar to those
of units buildable.
Land Valuation Methods
Equitable land valuation frequently calls for the assessor
to make optimum use of a very limited database. Of the three approaches to value
(income, cost and market comparison) the cost approach is virtually without use
in land appraisal. Land rents can be very helpful when using an income approach,
but are often dated and generally limited to commercial and agricultural lands.
In case of residential land, only the market comparison approach is directly applicable,
and its use is often limited by a shortage of vacant land sales. Hence, land valuation
often requires the appraiser to examine available land sales information very carefully.
Perhaps more than any other aspect of property valuation, accurate land appraisal
relies heavily upon the judgment of the appraiser.
Six methods of land valuation based on the three approaches
to value are:
Direct Sales: Recent
sales of similar vacant parcels are compared with the subject property.
Adjustments are made for differences among the properties and are
used to create indicators of value for the land under appraisal.
The sales comparison approach is the most reliable method of land
valuation. Reliable sales data is not always available. The assessor
must then rely on other methods of land valuation.
method is based on the principle of balance, which states that there
is a sense of proportion in the four agents of production. Land,
as one of the agents of production, has a logical value relationship
to total property value. Sales of improved properties are analyzed
and the values are allocated between land and improvements.
Abstraction: In this
method the cost approach is used in the analysis of the improved
property sales data. The depreciated replacement cost of the improvements
are subtracted from the sale price. The remainder is the indication
of land value.
Anticipated Use or Development:
Primarily used to value land in transition from agricultural to
other uses, this method subtracts total development costs from projected
sales prices to derive a value for the land.
Capitalization of Ground Rent:
This method uses the income approach to value to establish a current
value for land through its future income potential. Valuation of
Agriculture Land in Arizona is valued using this method.
Land Residual Procedure:
Calculates land value by first estimating net income earned by a
property and then subtracting income that can be attributed to the
improvements, leaving a residual value attributable to the land.