ALC cheat sheet

Farm and ranch listings are commonly priced per acre; irrigated cropland, dryland, and grazing land are valued as separate classes because productivity and water rights differ.

A water right is a separate property interest from the land; in prior-appropriation states the right carries a priority date, and senior rights are curtailed last in shortage years.

Timber value is estimated as stumpage: volume per acre × species/grade mix × stumpage price, less harvest and haul costs; standing timber is often severed from the land in a timber deed.

Recreational land value is driven by access (public or deeded), water features, wildlife habitat, and proximity to population centers rather than by agricultural productivity.

Perennial crops such as vineyards and orchards require multi-year establishment before income; an income approach must model the ramp-up period and vine/tree age, since yields vary by age class.

Highest and best use analysis must be legally permissible, physically possible, financially feasible, and maximally productive; for rural tracts the alternative uses are often farming, recreation, conservation, and rural residential.

Conservation easements and agricultural tax-deferral programs (use-value assessment) can reduce carrying cost but restrict subdivision and development; they must be disclosed and their effect on value quantified.

Carrying capacity for grazing is expressed in animal unit months (AUM); one animal unit is typically a 1,000-lb mature cow with or without calf, and stocking rate is AUMs divided by available forage.

Land value in transition is driven by the probability and timing of entitlement; a common technique is to value the land at its developed (finished lot) value discounted back for time, cost, and risk.

The subdivision development method (land development method) subtracts development costs, developer profit, and entrepreneurial incentive from gross sellout revenue to derive raw land value.

Absorption rate is the pace at which lots or units sell per period; months of supply equals available inventory divided by average monthly absorption.

A parcel is a legal buildable lot only if it meets current zoning minimums (area, width, frontage) and has legal access; pre-existing undersized lots may be grandfathered but are not automatically buildable.

Entitlement risk includes zoning, general plan designation, environmental review, utility capacity, and impact fees; each adds time and cost that reduce raw land value.

Development cost estimates include offsite and onsite infrastructure, grading, utilities, permits, impact fees, and a contingency typically expressed as a percentage of hard and soft costs.

Land basis per finished lot equals total land acquisition cost plus carry and entitlement cost divided by the number of approved lots; it is compared against comparable lot prices to test feasibility.

Wetlands, floodplains, steep slopes, and easements reduce net usable acreage; yield analysis should be based on developable area, not gross acreage.

A subdivision plat must be approved and recorded before lots can be conveyed separately; lot sales before recordation are typically done by contract with closing conditioned on plat recording.

Wholesaling land means contracting to purchase at one price and assigning or reselling the contract to an end buyer; profit is the spread between contract price and assignment price.

An assignable contract requires no anti-assignment clause and should specify the assignee's right to perform; a double closing uses two settlements to avoid disclosing the spread.

Earnest money is the wholesaler's principal risk; the contract should make the deposit the sole remedy (liquidated damages) and condition closing on feasibility, entitlement, and due diligence.

Lot value is influenced by corner versus interior location, frontage, topography, view, utility stubs, and HOA or CC&R obligations; price per lot is not uniform across a subdivision.

Infrastructure cost per lot falls as density rises; road, water, sewer, and drainage costs are largely fixed per linear foot, so lot size affects finished-lot cost per unit.

Disclosure duties require the seller/wholesaler to reveal material facts such as lack of access, floodplain, permit denial, or known environmental conditions.

Assignment fees are typically paid at closing from the end buyer's funds; if the end buyer funds before the wholesaler closes, an escrow or double-close structure protects the parties.

Assemblage creates plottage value when the combined parcel's utility and value exceed the sum of the individual parcels; the increment is plottage increment.

Assemblage feasibility requires identifying all ownerships in the target footprint, since a single holdout can defeat the project and raise acquisition cost.

Site selection screens for access, visibility, traffic counts, utilities, zoning, topography, environmental constraints, and proximity to demand generators.

Corner parcels and parcels with dual frontage often command a premium because of access and signage; mid-block interior parcels may require shared access easements.

Title and boundary due diligence includes a current survey or ALTA survey, title commitment review, and verification that no gaps, overlaps, or prescriptive easements exist.

Option agreements let an assembler control parcels at a locked price while completing entitlement, limiting capital at risk; the option price and term are negotiated terms.

Zoning and land-use compatibility across assembled parcels must be reconciled; a single parcel with a nonconforming use can block a unified plan.

Assembled parcels often have different highest and best uses individually; the assemblage value should be tested against a unified development plan rather than summed parcel values.

The three approaches to value are sales comparison, cost, and income; vacant land is most often valued by sales comparison because it produces no income and has no depreciable improvements.

Adjusted sale price in sales comparison equals sale price plus or minus adjustments for differences in time, location, size, access, utilities, zoning, and topography.

Units of comparison for land include price per acre, price per square foot, price per front foot, price per buildable lot, and price per animal unit.

The income approach capitalizes net operating income: value = NOI ÷ capitalization rate; for land, ground rent is capitalized using a land capitalization rate.

The cost approach for land is land value plus depreciated improvements; for raw land the approach reduces to land value because there are no improvements to depreciate.

An appraisal must state the property interest appraised (fee simple, leased fee, leasehold), the value definition, the effective date, and the highest and best use.

Larger parcels typically sell for less per acre than smaller parcels (the size or tract effect) because the pool of buyers shrinks as price and acreage increase.

Reconciliation weights the approaches by relevance and reliability and explains why one approach is given most weight; it is not a simple average of the indicated values.

Absolute auction means the property sells to the highest bidder regardless of price; reserve auction means the seller may reject bids below a stated reserve.

Auction with reserve requires the reserve to be disclosed in some jurisdictions and the seller may bid only if that right is expressly reserved and announced.

Buyer's premium is an amount added to the high bid and paid by the buyer; it is disclosed in the auction terms and increases total buyer cost above the bid.

Auction marketing compresses the marketing period and creates a firm sale date; the contract is formed at the fall of the hammer, subject to the announced terms.

Farm and land management includes lease negotiation, crop rotation, fertility and weed management, drainage and irrigation maintenance, and recordkeeping of inputs and yields.

Cash rent versus crop-share leases allocate price and production risk differently; crop-share leases align landlord and tenant incentives but require yield and price accounting.

Timber management plans set harvest rotation, thinning schedules, and reforestation obligations; sustainable yield is the annual growth removed without depleting the growing stock.

Property management for land tracks boundary lines, noxious weed control, fence and gate maintenance, trespass and recreational leases, and compliance with conservation program terms.