- This appraisal utilizes one or more of the following appraisal methods in determining the Value/s.
- Cost Summation Method: The Cost Summation Method is an estimate of what it will cost to produce, demolish, alter or repair a tangible property. The method consist of adding together all of the estimated individual items of cost. There are two kinds of items of cost (1) items purchased in the open market, appraised at buyers cost by the pricing principal. (2) Items such as labor, supervision, indirect expense, financing and so forth, appraised on the basis of recorded data derived from past experience. These appraisals are forecast of costs and rely on the causal and continuity postulates.
- Sales Analysis Method: This method is based on an analysis of the prices at which comparable properties have sold. The market value of the subject property is the most probable price which it would bring if offered for sale. A comparable property is one which has the same value elements as the subject property (but not necessarily, or even generally, in the same proportions). The Sales Analysis Method assumes that the price at which a comparable property sold, was the result of a particular weighted-combination of value elements comprised in that property. The existence of the value elements, in certain proportions, is assumed to be the cause which produces the sales price as an effect. This appraisal method utilizes the causal postulate.
- Income Approach: The Income Approach involves estimating the subject’s potential for generating income for its owner. The income is then capitalized, or used to estimate value, by one or more of several methods. Capitalization may be based on the ratio of annual income to sales price as exhibited in market sales. Alternatively, projected future income may be discounted to its present value at a discount or yield rate derived from current market yield expectations. Tangible property utilized in a business is only one component in the production of income. It is difficult to isolate the income attributable to only the building or only the equipment. When personal property or equipment is appraised, the income approach is not normally applicable.
- Although we consider all three approaches to value, we generally rely on the Cost and/or the Sales Analysis Method.
Definition of Values
- The definition of “Replacement Cost Value” is the cost of replacing the property exactly or with similar property of equal quality, value and age. The value in this category is determined by and is the result of consideration given to one of the following: The cost of replacement new, the cost of replacement used, or the cost of replacement as is. Furthermore, other considerations include the expected normal useful life of the item, observed obsolescence “as a result of age”, maintenance and condition, function and economic obsolescence, as well as average market conditions of supply and demand. Also, estimated costs of acquisition, transportation, installation, service connections, sales tax or other possible charges if applicable, have been incorporated in the final appraised value of this category.
- The definition of “Actual Cash Value” is the amount of Replacement Cash Value less depreciation.
- The definition of “Fair Market Value” as referred to in this report is that amount expected to be received in the transfer of an asset between a willing buyer and a willing seller, both knowledgeable in the use of and condition of the subject asset and neither being under compulsion to buy or sell. Market value may include personal property not installed and ready for use upon completion of installation, the only difference being the cost of transportation and installation.
- “Fair Market Value” generally relates to used personal property and is valued at replacement cost less depreciation, or it may be the product of any investigation of prices in the open market for personal property of like kind and quality.
- The definition of “Fair Market Value In Place/In Use” as referred to in this report is that amount expected to be received in the transfer of an asset between a willing buyer and a willing seller, both knowledgeable in the use of and condition of the subject asset and neither being under compulsion to buy or sell. “Fair Market Value-In Place/In Use” includes installation and the contribution of the item to the operating facility. The value presupposes the continued utilization of the item in connection with all other installed items. The estimated cost for installation, service connections and production output are incorporated into the final appraised value.
- “Fair Market Value In Place/In Use” generally relates to used personal property and is valued at replacement cost less depreciation, or it may be the product of any investigation of prices in the open market for personal property of the like kind and quality.
- The definition of “Liquidation Value” is the amount that can probably be obtained for a property under the conditions of a forced sale, or the net amount that can probably be obtained by sale of the net assets of a business enterprise upon dissolution.
- The definition of “Fair Rental Value” is: an opinion as to the amount or amounts of the periodic rent which can be obtained for the use of a specified piece of personal property. Said periodic rent shall be a monthly rental rate unless stated otherwise. The age, condition, location, original purchase price or replacement cost of said specified piece of personal property shall be taken into consideration in the final determination of the Fair Rental Value.
- The definition of “Salvage Value” is the amount that can probably be obtained by sale of a component of a property which has been separated from the whole because the component is no longer useful as a part of the whole property.
- As defined by the I.S.A. a “Hypothetical Appraisal” is based wholly or in part on unknown and/or unobtainable information. It may be a proposition advanced as possibly true and consistent with known data but requiring further investigation; be a theory so well established as to be generally accepted; be an unproven conclusion drawn from known facts; or contain a contingency not normally acceptable, i.e., appraising property without personal examination because it has been consumed by fire, lost, stolen, previously sold or unavailable for viewing.
Approach to the Value
- In addition to our physical inspection, where possible, we considered the history, character, location, size and utility of the subject property.
We have also consider the following:
- Comparable personal property prices from reputable used dealers, where available and supportable. Adjustments are made, where applicable and appropriate, to reflect the differences between the subject and comparable items.
- The value of the personal property not normally traded or supportable on used market are determined by establishing the cost of Replacement New. From this amount deductions for physical deterioration and functional obsolescence were taken into consideration where applicable.
- We consider where measurable, the condition and quality of the personal property, its utility and degree of functional or economical obsolescence.
- Where applicable, consideration is given to currency exchange, duties, taxes, freight, installation and other fees, where applicable.
- In making our investigation, where possible, we review the physical condition of all pieces of personal property.
- The personal property is generally considered to be well maintained and appears to be in (G) good operating condition, unless stated otherwise in the report.
Community and Non-Community Property
If the appraisal is being done for the purpose of dissolution of marriage, then the issue of community and non-community becomes relevant. It is important to know which items are community and which items are non-community property. The appraiser does not have the final say on this subject; it is left up to both parties’ legal representation. Non-Community property is defined as anything belonging to either party before date of marriage, anything given to one party only as a gift, anything belonging to parties not involved in the divorce, and/or anything purchased after the date of separation. Please consult with your lawyer if you require a more detailed definition than what have provided here. Often items indicated to be non-community property by one party are disputed by the other party. Therefore, in our appraisal report we will identify every item defined by one party as non-community. It will be placed in a separate column, but it will have a value.