Step 3: Derive land-value diminution ratio of encumbered parent tract
The difference is then divided by the adjusted price of the unencumbered sale to yield the land-value diminution (LVD) ratio of the unencumbered parent tract.
Obviously, if the LVD ratio is equal to or less than zero, the market indicates that no diminution occurs as a result of the easement.
Some types of property uses are resilient to value diminution of easement encumbrances.
The EFS ratio reflects the percentage of value diminution attributable to the easement taking and severance damages to the land.
As previously discussed, if the data are available an appraiser derives a proration of total diminution attributable to the easement taking area compensation and severance damages.
The first pairing is experiencing a diminution in value, however, as a result of the easement taking and severance damages to the remainder.
In this case, the value diminution accrues solely to the value of the easement taking area.
The subdivision that provides the best comparison of value diminution associated with encumbered versus unencumbered parcels is Walnut Creek (platted after the easement taking).
The process of dividing the overall value diminution of the encumbered parcel--expressed as a percentage ratio--by the EPTS ratio inherently accounts for the effect of economies of scale as well as for any component value of the frontyard versus the backyard.
This represents the most accurate means of estimating the diminution in value.
The EFS ratio is derived by dividing the value diminution ($3,900) by the total value contribution of the unencumbered surplus land area ($6,750), which equals 57.