Category: Appraisal Reviews

Pipeline Easements

Pipelines transport products from one point to another. Pipeline title is usually

pipeline2

acquired through an easement. According to Websters, an easement “is the right a property owner grants to another for the use of their property”.

Therefore, a pipeline easement is the right to construct, operate, and maintain a pipeline over the land of others within prescribed geographical limits.

How to Appraise a Pipeline

There are two different ways to appraise a pipeline depending on if it is part of a transportation corridor or within a conforming parcel.

Reviewing published articles and books, interviewing buyers and sellers of property that is encumbered by pipelines, and sending out letters to property owners are all methods that can help when appraising pipeline.

No Acceptable Standard Width for a Pipeline Easement

There is no acceptable standard width for a pipeline easement. It is usually determined through negotiations. Initially, railroads arrived at the easement width by rounding up the diameter of the pipe to the nearest foot, then adding two feet on both sides as a buffer to ensure the pipeline’s integrity and security. But, railroads soon realized that pipeline users were getting free access onto their corridors to service and maintain pipelines, so they reasoned that since automobile lanes on public roads are typically 11 to 12-feet wide, and the width of a standard truck is 8 feet 2 ½ inches, a 10 to 12-foot width requirement to access pipelines seemed reasonable.

Pipeline Easements and Severance Damage

Once the width of the pipeline has been negotiated, and the value has been determined through research and determining the value of surrounding land, severance damages can be analyzed. Severance damages are those damages to the remainder property that are compensable. Severance damages are seldom found for new pipelines in transportation corridors because owners of corridors do not let pipeline companies install their pipeline if it could diminish the value of the remaining portion of the corridor and/or pipeline easements.

Through advance research and preparation, conducting an in-depth search for best comparable data available, and conducting a thorough analysis, your appraisal of pipeline will be supportive and reliable. You can count on us to have your assignment done on time, too.

Sample Pipeline Appraisal assignments completed by Valentine Appraisal and Associates:

• Two Existing Pipelines at the Dominguez Channel in Carson, California

• An Existing Pipeline Traverse Crossing at the BNSF Transportation Corridor in Hesperia, CA

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Real Estate Appraiser, and Commercial Appraisal / Appraiser Coverage Areas: 93510 Agoura 91301 Agua Dulce, Saugus 91350 Airport Worldway; 90009 Alhambra 91801, 91803 Altadena 91001 Arcadia 91006 91007 ARCO Towers 90071 Arleta 91331 Artesia 90680 Athens 90044 Atwater Village 90039 Avalon 90704 Azusa 91702 Baldwin Hills 90008 Baldwin Park 91706 Bassett 91746 Bel Air Estates 90049. 90077 Bell 90201 Bell Gardens 90201 Bellflower 90706 Beverly Glen ; 90077, 90210 Beverly Hills 90210 – 90212 Biola Univ. (La Mirada) 90639 Boyle Heights 90033 Bradbury 91010 Brentwood 90049 91501 – 91502 / 91506 / 91523 (Glenoaks) 91504 Burbank (Woodbury Univ.) 91510 Cal State Dominguez Hills (Carson) 90747 Cal State Long Beach (Long Beach) 90840 Cal State Northridge 91330 Cal Tech (Pasadena) 91125 – 91126 Calabasas 91302/91372 Canoga Park 91303 – 91304 Canyon Country (Santa Clarita) 91351 Carson 90745 – 90746 Carson (CS Univ. 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Appraisal Review

In virtually every trade and profession, certain persons review, criticize, critique, inspect, examine, cross-check, retest, question, judge, or comment on the work of others.  The essence of appraisal review is to investigate, analyze, and verify the logic, procedures, and methodologies used in appraisal reports to insure that the preparation is competent and thorough, and results in a reasonable estimate, which instills confidence in the reliability of the appraisal report for the client. 

There are various types of appraisal reviews:

A technical review is performed by an appraiser in accordance with Standard 3 of USPAP. 

An administrative review is recognized as a compliance review, usually performed by a client or user and may not necessarily be performed by an appraiser, nor is it bound by Standard 3 of USPAP.  It may just be a preliminary review as part of a technical review process later on. 

The reviewer may suggest several courses of action.  For example:

  •  Additional market data be obtained
  •  Specific pages be corrected for compliance
  •  Interviews be scheduled with people familiar with the property
  • Opinions be obtained from experts in related disciplines

When a field review is needed, the review appraiser conducts a field inspection.  Suggested criteria to measure reviewer performance include:

  • Technical ability
  • Timing
  • Quality of review
  • Conclusion

The appraisal review includes various processes:

  • Real estate to be appraised
  • Property rights involved
  • Use of the appraisal
  • Definition of value
  • Date of value estimate
  • Scope of the appraisal
  • Other limiting conditions

Furthermore, general data consists of information on social, economic, governmental, and environmental factors that affect value.  Also, highest and best use is concluded, taking into consideration what is legally permissible, physically possible, and financially feasible.  Then the three traditional approaches of value are analyzed for reasonableness and accuracy. 

The common reporting deficiencies in an appraisal report include:

  • Poorly written report which is not convincing to the client or reviewer
  • Lacks organization that limits comprehension by the reader
  • Lacks a favorable impression of the appraiser
  • Avoids the main issues and/or inconsistencies within the report
  • Lack of analysis
  • Lack of guidance throughout the report
  • Discrepancies between data analyses, which erodes confidence in its conclusions
  • Reasoning is not straightforward and reasonable
  • Incomplete information of a sale or comp
  • Lack of reconciliation of different value

Finally, the reviewer’s role is to determine if an appraisal report (1) meets acceptable standards in the criteria of the client and users of the report; (2) conforms to the Uniform Standards of Professional Appraisal Practice (USPAP); (3) complies with governmental regulatory requirements; and (4) concludes with a reasonable and reliable market value estimate. 

The client generally wants the appraisals to:

  • Identify market trends
  • Clearly describe the property
  • Explain apparent legal obligations that go with the land, including    covenants, conditions, restrictions, easements, and zoning
  • Provide detailed sales, rental, and investment information regarding similar properties in the same market
  • Outline both property and market risk parameters
  • Provide valuable market trend information
  • Notify the client of any potential environmental hazards
  • Serve as a valuable management tool for portfolio planning and advising third-party clients

 

 

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