06 - 06.04 - Planning and Zoning Items

Home Browse Search

r ` e ADDENDUM Borrower. Earl Hemmerich File No.: Pequot5053Hemm Property Address: XXX County Road 112 Case No.: City: Pequot Lakes State: MN Zip: 56472 Lender. Earl Hemmerich If properly priced to the market and placed on the market during the normal selling season,will sell within the 6 to 12 month time-frame. In establishing a basis for value,the major characteristics of a site that require analysis include: 1 Physical characteristics: size, shape,dimensions,topography,drainage,bearing capacity and permeability of the soil. 2. Zoning and other public controls: use restrictions,structural restrictions,setback requirements,height limitations,on-site parking requirements,safety requirements and fire code requirements. 3. Title limitations: liens,easements,special assessments and covenants. 4. Access(location):transit,highway,visual access,electricity,fire and police protection, availability,capacities,and costs. 5. Availability:price,financing terms. Precise and specific factual information can be obtained concerning most of the above factors. Some require further analysis. It is in terms of this analysis that standards of what is appropriate, and acceptable,must be developed. Direct Sales Comparison Approach The following land sales are considered to provide the best indication of value for the subject property assumed to be vacant. In providing comparable land sales for our analysis,we have researched real estate transactions over the past several years for those which have occurred in,and around the subject neighborhood.A summary of the most comparable transactions considered to provide the best indication of value for the subject property,assumed to be vacant,is presented on the following pages. Commercial and rural residential sales were found to best represent the subject land value. Adjustment Analysis The most appropriate use for an adjustment grid and pairing sales for specific dollar or percentage adjustments is for simple properties where relatively few adjustments explain differences in value. Vacant land,simple retail, some industrial, and residential properties fall into this category. Another consideration in the sales comparison approach is that adjustments can be overlapping. Overlapping adjustments are those that look like independent adjustments,but may in fact be reflecting the same market consideration for differences in price.For example,adjustments for utility,location, zoning,and traffic count may be overlapping and may all be included in the market perception of 'ocation. If various location factors such as traffic count or zoning are delineated for adjustment,the `—'appraiser should consider the specific effect of each factor on value. 1. Real property rights conveyed- The real property rights conveyed is the first adjustment because the appraisal of the subject property rights can only be compared to similar property rights. If no information can be obtained to extract an adjustment of,for example,a fee simple interest to a leased fee interest(or leased fee to fee simple),then the sale should not be used. In practice,a sale of a fee simple interest is typically not compared to a leased fee or leasehold estate. Typically,comparability required omitting sales of different property interests. It can be seen that this is a major reason why this is the first consideration. A sale of a leased fee estate may be used(if appraising fee simple)if the appraiser is convinced that the rental structure is at market,or if there is a short time left on existing leases and the affect of the leases can be adjusted,or if substantial information is available to adjust for the value of the leased fee to fee simple. All Addendum Page 2 of 4