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Conservation Easement Appraisal Red Flags
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Sales price within past 3 years (required) is substantially lower than appraiser’s before value
- Highest and best use, HBU, is the same before and after
- Appraisers used DCF (development approach) for before value.
- Insufficient market data
- Possible Use Vs. Highest and Best Use
- Comparable Sales
- Lack of approved development plan
- Engineering Reports/Estimated
- Unsupported Discount Rates
- Floating Building Envelopes/Outparcels
- Restrictions are not perpetual
- Unproven Qualifications of Appraiser and BDR Expert
- Letter from Land Trust recognizing donation from the tax payer (Contemporaneous Written Acknowledgment)
- Date of Appraisal
- Failure to Appraise Larger Parcel
- Active minerals market but donor does not own the mineral rights
- The property is mortgaged but the bank has not subordinated the lien
- Excessive subdivision allowed
- Retaining “Heart of the Watermelon”
- “Gray” language in CE document