How to Appraise a Value on a Property Easement

A proposed easement can significantly affect the value of your home.

A proposed easement can significantly affect the value of your home.

An easement is an encumbrance on the title to real property that grants the right to use the property but no ownership interest. Easements may be granted to a specific party or act as a general encumbrance on the property. The appraised value of an easement is based on the impact it has on the burdened property. The main factors to consider are the easement's purpose, location and use.

Types

Right-of-way easements allow another party to travel over your property to reach another location. Utility easements are often granted to public agencies through eminent domain. Access easements grant the use of the property for a specific purpose. Conservation easements are granted to charities and typically block certain types of development or activity that are harmful to the environment. An easement may end with the death of the property owner or easement holder, or it may continue on forever and transfer with the land.

Gather Information

Obtain as much information as possible about the easement, especially regarding its size and purpose as well as the type of property rights granted. If it has already been legally granted, you can look up the easement deed at the county clerk's office. Look at the blueprints for the property if no deed was recorded. You may need to visit the property and physically measure the easement to verify the specifications.

Whole Property Appraisal

Start by appraising the value of the entire property as if the easement was not present. Look at comparable sales in the area as an indication of the current market value. Try to only use sales completed in the past year if possible, and make adjustments for the age and condition of the property. For commercial rentals, the income method of valuation is often more accurate. Adjust the monthly or yearly income of the property for vacancies, and multiply by the appropriate factor for your market. Use comparable sales of commercial properties to determine the correct multiplier.

Remainder

Determine the value of the property as encumbered by the easement. Consider the overall impact of the easement on the property. Some easements may actually add positive value, such as the infrastructure for high-speed internet or cable television. These encumbrances are hidden and do not interfere with the use of the property, while a right-of-way easement that impairs access to other parts of the property would have a negative effect on its value. Subtract the remainder value from the value of the whole property to find the value of the easement.

 

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