PROPERTY EVALUATION (RESTRICTED REPORT)
METHODOLOGY Basis of Valuation
Valuation is based upon general and specific background experience, opinions of qualified, informed persons; consideration of all data gathered during the investigative phase of the valuation, and an analysis of all market data available.
Valuation Approaches
Three basic valuation approaches are generally used: (1) the Cost Approach; (2) the Sales Comparison Approach; and (3) the Income Approach. 1 One of these approaches have been utilized in this appraisal in determining the market value "as is" of the fee simple interest. Primary emphasis was placed on the Sales Comparison Approach since the most likely purchaser is an owner user and not an investor. Owner users usually use the Sales Comparison (a.k.a. Market) Approach. We have omitted the Income approach, due to the special use nature of this property. It is rare for residential properties to be leased. Rather, they are most often owner-user properties and these assets are best valued by the Sales Comparison method. The Cost Approach was not employed as the subject consists of vacant land with no improvements to value. The final analytical step in the valuation process is the reconciliation of the value indications into a single dollar figure. We have examined the relative dependability and applicability of each approach in relation with the subject’s fee simple interest. In addition, we will also consider the importance and influence of each approach in relation to the reactions of typical investors in the current market. The result is a final value conclusion of the market value of the fee simple interest in the subject property as of the date value. The subject’s zoning (RR – Resort Residential) is generally more restrictive than most other zoning designations in the area as all uses require either a conditional use permit or a planned unit development permit. Given the subject’s location and surrounding uses, we have relied upon comparables that either have the RR zoning designation or an R1 This approach calculates either the reproduction cost estimate of the subject property improvements-new (maintaining comparable quality and utility). Losses in value are then subtracted from this value. Losses are sustained through depreciation, age, wear and tear, functionally obsolescent features. and economic factors affecting the property. The net value is then added to the estimated land value to provide a total value estimate. This approach is based upon the principle that the value of a property tends to be set by the price at which comparable properties have recently been sold or for which they can be acquired. This approach requires a detailed comparison of sales of' comparable properties with the subject property. One of the main requisites, therefore, is that a sufficient number of transactions of comparable properties be available to provide an accurate indicator of value and that accurate information regarding price, terms, property description, and proposed use be obtained through interview and observation. This approach is based upon the theory that the value of the property tends to be set by the expected income or cash flow to the owner. It is, in effect, the capitalization of expected future income into a present worth. This approach requires an estimate of net income, an analysis of all expense items, the selection of a capitalization rate, and the processing of the net income stream into a value estimate.
Methodology
1 Cost Approach
Sales Comparison Approach
Income Approach
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