SECTION 385:10-1-8. Appraisals

  Prior to any application for a farm loan being submitted to the Commissioners for approval, the land being offered as security for the loan shall be appraised by an appraiser of the Land Office. All appraisals, using forms provided by the Commissioners of the Land Office, will be made in accordance with accepted methods and techniques of national appraisal societies, such as: Appraisers Institute, Farm managers and Rural Appraisers, Independent Fee Appraisers Society; or other recognized appraisal societies.

(1)   Appraisal qualifications. In making appraisal, the appraiser shall determine:

(A)   Physical characteristics of the farm;

(B)   Buildings and other improvements;

(C)   Neighborhood data;

(D)   Production, income, and expense data; and

(E)   Comparative sales data.

(2)   Physical characteristics of appraised property. The appraiser shall conduct a personal examination of the actual physical characteristics of the property as they appear on the date of the appraisal and shall consider the following:

(A)   Quality of the soil and its productivity;

(B)   Amount and availability of soil moisture;

(C)   Timber or crops on the property;

(D)   Quantity, quality and durability of supply of water for residential use, farm use or irrigation;

(E)   Slope of land;

(F)   Quality, extent and adequacy of drainage and condition of drainage tile;

(G)   Degree of erosion;

(H)   Location of property in relation to towns, other similar properties and to hazardous weather areas;

(I)   Location, quality and condition of boundary and inside fences;

(J)   Acreage of each field in cultivation and crops grown, pasture or waste; and

(K)   Buildings on the land; and other structural improvements including roads.

(3)   Market value of property. Appraisers shall determine market value" of the property, defined as the highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale: buyer and seller, each acting prudently, knowledgeable and assuming price is not affected by undue stimulus. "Market value" presumes that on date of appraisal there exists the following conditions:

(A)   Buyer and seller are typically motivated;

(B)   Both parties are knowledgeable about all uses of the property and each acting in his own best interest;

(C)   A reasonable time is allowed for exposure in the open market;

(D)   Payment is made in cash or its equivalent;

(E)   Financing, if any, is on terms generally available in the community at the specified date and typical for the property type in its locale; and

(F)   The price represents a consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs or credits incurred in the transaction.

(4)   Methods to determine market value of property. For purposes of determining "market value" the appraiser shall utilize three approaches: Direct Sales Comparison, Capitalization of Income, and Cost methods, if applicable, and shall reconcile the three on the basis of which data appearing to be most reliable, provided, that a weighted preference shall be given to the Direct Sales Comparison method.

(A)   Direct sales comparison. The appraisers shall compile as much data as possible under the circumstances for the most recent sales of comparable properties in the general area of property being appraised in recent period. Properties used for comparable sales analysis shall be evaluated on basis of similarity of such properties to the property being appraised, and the market value of the property being appraised shall be adjusted, up or down, depending upon dissimilarities between comparable properties. Principle points of comparison for determining similarities of properties are:

(i)   Location;

(ii)   Soil and topography;

(iii)   Water resources;

(iv)   Dwelling;

(v)   Other essential buildings;

(vi)   Allotments;

(vii)   Proportion of cropland to total land;

(viii)   Farm layout and arrangement;

(ix)   General appearance;

(x)   Accessibility to services and facilities;

(xi)   State of cultivation;

(xii)   Woodland;

(xiii)   Pasture;

(xiv)   Urban or rural orientation; and

(xvi)   Alternative uses.

(B)   Capitalization of income. The appraiser shall estimate average yearly earnings of appraised property and divide the estimated annual earnings by a capitalization rate of general application in the area.

(C)   Cost Approach.

(i)   An indication of value under the Cost Approach is obtained by adding the value of essential buildings to the market value of the land. Depreciation must recognize functional and economic obsolescence as well as physical deterioration in building value. Non-essential and extremely old buildings may have insurance value but would not add to overall building value.

(ii)   Market value of the land will be value of the land without buildings. It will include land development of a permanent nature. A value per acre for land resources will be determined by analyzing sale price of comparable land.

(5)   Appraisal report. A written report of appraisal, on form provided by Commissioners of the Land Office, setting forth the estimated value, shall be prepared and presented to the Commissioners of the Land Office. Appraisals are public record and are available to the general public in accordance with 64 Okl.St.Ann. 1981,§61(A). The report shall conform with the guidelines in 4(A) through 4(C) of this subsection.