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<br />2. Financing - A financing adjustment is actually a specific motivation adjustment and often
<br />is not capable of being accurately derived from a mathematical discounting process. The
<br />most reliable financing adjustment is from paired sales but such detailed data is generally
<br />not available from sales information. In practice, the parties in a transaction should be
<br />consulted concerning the effects of favorable (or unfavorable) fmancing and this should be
<br />compared to a mathematically derived indication by discounting the payments specified by
<br />the transaction at the market rate of interest. The most commonly used market value
<br />definition requires appraising to "cash, with typical institutional financing or other stated
<br />terms. "Furthermore, if the subject is assumed to have other than typical institutional
<br />terms, the terms and the effects of the financing on the appraised value should be set forth
<br />in the report. Generally, it is good practice to indicate the cash value of the subject and
<br />bottom line the effects of the financing assumed in the appraisal. None of the comparables
<br />required adjustment for financing since they are all cash or at market financing terms.
<br />
<br />3. Conditions of sale (motivation) - The fIrst three adjustments, including conditions of sale -
<br />are applied before the market conditions adjustment. This is because the motivation of the
<br />parties in the transaction to agree on the price paid was at the time of sale. As with
<br />property rights conveyed, a motivation other than that assumed in the value definition may
<br />require discarding a sale from consideration. For example, if a sale were affected by
<br />undue duress, then no appropriate adjustment could probably be derived. However, an
<br />adjustment for plottage, purchasing additional land for expansion or parking, and other
<br />typically motivated sales may have an adjustment that may be inferred from the market by
<br />comparison or from information provided by the buyer or seller. None of the listed sales
<br />. are considered to be reflective of this condition.
<br />
<br />4.
<br />
<br />Market conditions (time) - A time adjustment is a market conditions adjustment because
<br />it is changes in the marketplace, and not the passage oftime, that causes prices to change
<br />(the principle of change). A time adjustment is a cumulative adjustment within the sales
<br />comparison approach that requires a mathematical computation. Time adjustments may
<br />be straight-line (noncompounded) or compound (curvilinear). Neither method is more
<br />appropriate than the other as long as market changes are accurately adjusted, and as long
<br />as the procedure used is consistent with the method used when a time adjustment was
<br />abstracted and with the manner in which it was applied. We have observed a consistent
<br />pattern of change in the market for lake lots over the past 10 year period. Comparable
<br />Sale #9 represents a resale of Comparable Sale #8 after 2 years or 24 months. These sales
<br />reflect an inflation rate of about 10% annually. We have therefore applied a time
<br />adjustment to each sale based on 10% annually.
<br />
<br />I
<br />I '
<br />
<br />5. Location - A location adjustment is an additive adjustment, while the previous four
<br />adjustments are cumulative. Tracts of sinrilar highest and best use should be compared.
<br />Generally, it is inappropriate to use sales of different highest and best use 'with an attempt
<br />to adjust the differences for location. For example, it.would be better to obtain sales of
<br />... _ . __ _. ____ .__ the, SaII1~ highest and lJestusefrom a larger area and adjust for differences in location than"," ......~,._ '.
<br />':;':.:-.;::.'_.'~'",c;,;':;';'_ ~:~~.:e-~;;::.;,~.;;$ 5:~~O:::';::'::':"^L",,-:",~~i';;'';..-k'-:-'-:,..:~~::;,i;k~I~-:;:-;_.' ,~' ~;;;":;~;_;.'__..~;:.:..::;~=., \2.;':;;~'.'~~"~";;;,,,;~-,~-,,,=,,~,,~_.i,,,-,,,o:;=-.,-, ':'.>_'C='--~--:L _'.-,'-'-"o'_~- -,-,<,'~"",~o_~~"nc~_--"~,,"C""~"O~_"'"""''''''_~'':'''-c:..~,,",,~,.-=""::_"==~~""""''''''''''--''''-'L:;;'''''=:.___="..l=,",~~'----':l::''CO'-''''__''-=-''=i>'''''~~~''''';::':;;=~",0
<br />--~.. - . ,-- . to obtainsaIes.. olpropeities ihataie closer to the subject but have a different highest and .
<br />: best use. Because this adjustment is considered to b~ additive, it is netted out withphysical
<br />and other adjustments. All the comparable sales were considered to have either park,
<br />conservation, assemblage for density or residential purposes as their highest and best use.
<br />No adjustments were, however made for location.
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