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THE ftPPRfilSAL PROCESS <br />In arriving at an titxaation of aarket valut for tht tubjtct proptrty, <br />itrtintnt data Nhich has an influenct on tht valut of tht proptrty, it <br />^uaulattd froa tht aarktt. This data is thtn analyztd in rtlation to its <br />nflutnct on tht subjtct proptrty in aonttary ttras to tht typical buytr. This <br />malysis involvts thrtt approachts to valut, inhich art tht Dirtct Salts <br />loaparifon Approach, tht Incoat Approach, and tht Cost Approach. All thrtt <br />ipproachas art ustd in this rtport. <br />Tht Oirtct Salts Coaparison Approach is bastd on salts of siailar proptrtits <br />n tht local aarktt. Tht salts pricts of tht coaparablt proptrtits art adjusttd <br />or thfir rtsptctivt difftrtncts froa t\ subjtct in artas such as data of <br />altf location, aga and condition, sizt of iaprovtatnts, and aatnitits. Tht <br />djusted salts pricts art indications at which tht coaparaolts would havt sold <br />ad thty been tssentially siailar to tht subjtct. Tht adjusttd salts pricts act <br />s support and art ustd to deteraint an tstiaatad aarktt valut of tht subjtct <br />(rooerty through reconciliation. This aporoach is tost aoplicable when an <br />idequate aaount of aarket data is available. Insufficient data, incorrect data, <br />r errors in judgaent can liait this approach. <br />The Incoae Approach typically ustd for residential properties is bastd on the <br />ross rent aultiplier. An appropriate gross rent is aultiplied by a gross rent <br />ultiplier to arrive at an estiaate of value. Tne gross rent aultiplier is <br />trived froa recent sales of cotparable properties that were rented at the tiae <br />f sale. By dividing the aonthly unfurnished rent into the sjkle price, a gross <br />ent aultiplier is established. Several gross rent sultipliers fora a range <br />rot whicn an appropriate one is then selected. Estiaated rent for the subject <br />s also derived froa the rents of siailar properties. The incoae approach is <br />onsidered to be a reliable approach wnen an aaequate aaount of rental data is <br />vailable. This approacn can also be usee to estiaate aiainisned utility by <br />pplying the aultiplier to the rent loss aue to the obsolescence. <br />In the Cost Approach, the value of the site is e-*’iaated as if vacant and <br />t^ailable to be put to its highest and best use. This is cone dv the Direct <br />lies Coaparison Approach using recent sales of vacant sites, froa the saae or <br />iailar neighborhoods as the subject. An estiaate is then aade of the <br />^production cost new or replaceaent cost new of the laproveaents using today’s <br />)sts. Froa this is subtracted as estimate taken froa the aarket of all accrued <br />ipreciation. The indicated value of this approach is the sum of the site plus <br />>i depreciated value of the laproveaents. Due to the difficulty on accurately <br />nessing depreciation, this approach tends to be less reliable in older <br />'operties and can result in a over or under estiaation of value. <br />The final estiaation of aarket value is reached through the reconciliation of <br />It indicated three approaches. Consideration is given to the reliability of <br />ich approach, ana the quality and quantity of data available. <br />fined in Real Estate Appraisal Terainology (coapiled and edited by Byrl N. <br />lyct Ph.D. fSRPA, copyright 1984, Ballinger Publishing Cotpany, Pages <br />i, 79,122, 132.) as: