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• <br /> C.} .ESTI <br /> 0 CONCILI TION TEMh <br /> D CONC�.USION€ F INAL ' : ) ::; ::,..:`::; <br /> In summary, the value indications for the three approaches to value utilized in this appraisal are <br /> as follows: <br /> COST APPROACH: $820,000 <br /> SALES COMPARISON APPROACH: $810,000 <br /> INCOME APPROACH: $790,000 <br /> Cnst_Approach <br /> In the appraisal process, the replacement cost new typically tends to set the upper limit of value <br /> for a property, as an informed buyer will pay no more for an existing property than it would cost <br /> for them to construct a new building of equal quality and utility. The cost data utilized in this <br /> analysis is based on data from both a nationally recognized cost service which has been adjusted <br /> to current time and location, as well as local builders and independently secured data. The land <br /> value and estimated cost new were considered to be reliable. However, the subject property is 20 <br /> (effective) years old and suffers from significant amounts of accrued depreciation. Although <br /> appropriate measures were used to estimate the amounts of accrued depreciation, the primary <br /> • weakness of the Cost Approach is in the accurate reflection of total accrued depreciation of the <br /> property value, which by its nature is difficult to measure. <br /> An additional weakness of the Cost Approach is that it gives only an indirect consideration of the <br /> income-producing capabilities of a property such as the subject. Real estate investors today give <br /> little consideration to the cost method of estimating value for investment type properties such as <br /> the subject. Rather, the Cost Approach is used as a check on the value indicated by the sales and <br /> income capitalization approaches. Therefore, the Cost Approach is given the least weight of the <br /> total estimated market value. <br /> Sales o n ra ison Approach <br /> The Sales Comparison Approach is based on the analysis of sales of generally comparable single <br /> tenant commercial buildings in the Twin Cities area. These sales were thoroughly analyzed and <br /> adjustments were made for those dissimilarities between the comparable sales and the subject <br /> property. <br /> The primary strength of this approach is that it is the most direct approach to value, as well as the <br /> most easily understood. All of the sales were compared on a per square foot basis of gross <br /> building area, which is common for office/warehouse, industrial and commercial buildings. The <br /> 0 <br /> -95- <br />