Across The Fence

Definition of Across The Fence

Across the Fence (ATF) is an appraisal technique often used in situations involving condemnation, where property is taken for public use (such as for roads, pipelines, or utility easements). In this methodology, the value of the condemned property is determined based on the uses and market prices of the adjacent land. This approach provides a fair value that reflects the property’s usability and market conditions relative to its neighbors, rather than solely its unique characteristics.

Examples

A municipality decides to construct a new highway through a rural area. The value of farmland adjacent to the intended highway route is $7,000 per acre. Applying the Across The Fence technique, the local government will offer $7,000 per acre for the acquired farmland to ensure a fair market value is maintained.
A utility company plans to lay a new electric cable through an urban residential neighborhood. The average price of residential land adjacent to the proposed project is $250,000 per lot. Using the ATF approach, each affected property owner is compensated $250,000 per lot taken for the project.

Frequently Asked Questions

What is the primary purpose of the Across The Fence appraisal technique?

The main goal is to estimate the fair market value of property taken during condemnation based on adjacent property use and current market prices.

How does the Across The Fence method differ from the Corridor method?

The Corridor method evaluates property based on its potential to be part of a transport or utility corridor, considering the increased value from its development into a long, narrow tract of land for connectivity purposes.

In what scenarios is the Across The Fence approach most applicable?

This approach is often used in cases where land is appropriated for infrastructure projects such as roads, pipelines, or utilities where the adjacent land uses provide a comparable market reference.

Are there limitations to the Across The Fence method?

Yes, it might not fully account for unique property features, potential future developmental value, or specific condemnation impacts beyond neighboring uses.

Who determines the values used in the Across The Fence appraisal?

Certified real estate appraisers with knowledge of local property transactions and market conditions typically perform these valuations.

Condemnation: A legal process where government or public authorities take private property for public use, with compensation to the owner.

Corridor Method: An appraisal technique that calculates the value of land used as a transportation or utility strip, based on its potential as a continuous corridor.

Eminent Domain: The right of a government to expropriate private property for public use, with fair compensation.

Market Price: The price at which a property would sell under current market conditions, as determined by supply and demand dynamics.

Fair Market Value: An estimate of the market value of a property, assuming a knowledgeable buyer and seller under no compulsion to act.

Online Resources

References

Miller, R., Skinner, J., “Principles of Real Estate Practice,” Real Estate Education Co., 2022.
American Society of Appraisers, “Valuation of Properties Subject to Eminent Domain,” ASA, 2019.
Appraisal Institute, “The Appraisal of Real Estate,” 14th Edition, Appraisal Institute, 2013.

Suggested Books for Further Studies

“The Appraisal of Real Estate, 14th Edition” by the Appraisal Institute.
“Principles of Real Estate Practice” by Stephen Mettling and David Harlan.
“Mastering Real Estate Appraisal” by Dennis H. Carr.
“Fundamentals of Real Estate Appraisal” by William L. Ventolo Jr., and Martha R. Williams.
“Property Valuation: The Five Methods” by Christopher C.D. Sloan.

Real Estate Basics: Across The Fence Fundamentals Quiz

### Does Across The Fence (ATF) appraisal method consider the unique characteristics of the property? - [ ] Yes, it focuses on specific property features. - [x] No, it bases value on adjacent properties' uses. - [ ] It's an approach focusing globally on real estate trends. - [ ] Predicts future market appreciation. > **Explanation:** The ATF method values a property based on the uses and market prices of neighboring properties, not unique characteristics of the subjected property. ### What is one common use for the Across The Fence appraisal technique? - [x] Determining compensation for condemned land in public projects. - [ ] Assessing value for private property sales. - [ ] Estimating rental prices. - [ ] Setting real estate tax levels. > **Explanation:** ATF is primarily used in determining compensation for land taken by public needs, ensuring assessments reflect adjacent land utilities. ### Under what legal framework does the Across The Fence technique frequently become relevant? - [ ] Property Transfer Laws - [ ] Zoning Regulations - [x] Eminent Domain - [ ] Real Estate Development Codes > **Explanation:** The technique is frequently used under Eminent Domain scenarios where private land is appropriated by the government for public uses. ### Which factor does not typically influence Across The Fence valuation? - [ ] Adjacent land uses - [ ] Market prices of neighboring properties - [x] Future developmental potential - [ ] Condemnation objectives > **Explanation:** Future developmental potential does not typically influence ATF valuation; it focuses on current adjacent land uses and market prices. ### Which profession is generally responsible for determining values for the Across The Fence appraisal method? - [ ] Real estate developers - [ ] Local government officials - [x] Certified real estate appraisers - [ ] Property managers > **Explanation:** Certified real estate appraisers usually conduct these valuations, leveraging their market knowledge and professional experience. ### What's a significant difference between ATF and the Corridor method? - [x] ATF bases value on adjacent land use, Corridor considers transport potential. - [ ] ATF considers potential future values, while Corridor uses past trends. - [ ] ATF focuses on rural areas, Corridor on urban locales. - [ ] There are no differences; both methods are identical. > **Explanation:** ATF evaluates current adjacent land uses and market value; the Corridor method considers the potential connectivity value as a corridor. ### What public infrastructure project could necessitate Across The Fence appraisal? - [ ] Shopping mall construction - [ ] Private residence renovations - [x] Highway development - [ ] Hotel expansion > **Explanation:** Highway construction, as a public project involving right-of-way acquisitions, would potentially necessitate across-the-fence appraisal techniques. ### Which legal concept aligns closely with Across The Fence appraisals? - [x] Eminent Domain - [ ] Adverse Possession - [ ] Homestead Exemption - [ ] Real Estate Syndication > **Explanation:** Eminent Domain matches closely as it involves government appropriation of private land with just compensation assessments like ATF. ### Across The Fence evaluations uphold values by assessing what factor? - [x] Adjacent land use - [ ] Building materials quality - [ ] Owner's financial circumstances - [ ] Local crime rate > **Explanation:** ATF evaluations uphold values by assessing adjacent land uses, ensuring fair compensatory values reflecting market conditions nearby. ### If a property is condemned for public utility use, how does ATF resolve its value? - [ ] By owner's initial purchase price. - [x] By examining adjacent land market values and usage. - [ ] By insurance premium costs. - [ ] Municipal tax receipts. > **Explanation:** ATF resolves condemnation value by examining adjacent land's market values and usage, reflecting the area's current real estate climate.