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<br />BRKW APPRAISALS, INC. PAGE 2 <br />The Sales Comparison Approach can be used in appraising vacant land or improved <br />properties (land with building). This approach involves comparing recent sales of <br />land or improved properties which are reasonably similar to the property bei ng <br />appraised . Adjustments are made to the prices of the comparable sales for value - <br />related differences relative to the subject property. The result is a reasonably narrow <br />range of adjusted prices which indicate what the subject property likely would sell for <br />if offered on the market. The range of value indications is reconciled into a final, <br />single -point opinion of market value for the property within this valuation approach . <br /> <br />The Income Approach involves determining market rent for the property, based on <br />rent comparables from the market, and capitalizing an annual net income from that <br />rent into a property value indication, based on parameters used by investors for <br />similar properties. <br /> <br />Property 1 – Former Public Works Site <br /> <br />Since this property reflects vacant land, of the three primary approaches to value, the <br />Sales Comparison Approach would be applied in valuing the land component of the <br />subject property. The Cost and Income approaches would not be utilized because they <br />typically are only applicable when the property contains improvements with <br />contributory value. Though in some cases vacant land is leased, it is concluded that <br />there would likely be no demand for the subject property in terms of a land lease, <br />given its location and other factors. <br /> <br />The City has asked for three valuation scenarios for Property 1: <br /> <br />1. Value given development with uses allowed within current Neighborhood <br />Business zoning (limited business such as office, medical, and limited retail); <br /> <br />2. Value given development with townhomes; and <br /> <br />3. Value given development with single -family homes. <br /> <br />Typically land is appraised based on its highest and best use, which includes four <br />main tests, all of which must be met in the following order : U ses that are legally <br />permissible, phy sically possible, financially feasible and maximally productive <br />(resulting in the highest value). Though an appraisal assignment for the subject land <br />typically would not include a comprehensive feasibility study, t ypically it would <br />include an analysis and discussion by the appraiser of general indications of demand <br />and feasibility for a particular use , based on a review of market trends and appraiser <br />experience ; such discussion and analysis would be followed by the appraiser’s opinion <br />of the highest and best use, and the property would be valued based on that use. <br /> <br />Since legal permissibility is the first test of highest and best use that must be met, in <br />most cases , the appraiser’s focus is on current zoning and its allowed uses, when <br />concluding highest and best use. However, there are exceptions, including when there <br />is clear evidence that there is little or no demand for the currently allowed uses, there <br />is demonstrable demand for other uses, and it is reasonably probable that the property <br />could be rezoned to allow such other uses.