Asking-price discount for conservation easements

Conservation easements vary a lot, although all are supposed to serve some public interest.

Some are sold, but most are donated. They are usually sold or donated in perpetuity, though some have limited terms. Most easements are set up to preserve open space, restrict/eliminate development or keep farmland in agricultural use.

At the time of the donation, its value is calculated. The donor uses the value to receive, federal, state, local (property tax) and estate tax benefits. These are substantial.

The question I have is how should a buyer calculate the discounted value of a for-sale property burdened with a conservation easement?

Many sellers seem to think that a CE is a selling point and don’t like to discount their asking prices.

It’s often hard to find comps to use in a conventional appraisal.

I’ve been involved in several situations of this sort. It’s hard to agree on a valuation methodology.

What are your thoughts?

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.