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MMAAHHAANN RREEAALL EESSTTAATTEE AAPPPPRRAAIISSAALL,, IINNCC..
RRiicckk LL.. MMaahhaann
Arkansas Certified General #CG0307 Missouri Certified General #RA002537
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
APPRAISAL REPORT
Newland’s Lodge 295 River Road
Lakeview, Arkansas 72642
AS OF
October 17, 2016
PREPARED FOR:
Charles Newland 281 River Road
Lakeview, Arkansas 72642
PREPARED BY:
Rick L. Mahan Mahan Real Estate Appraisal, Inc.
MMAAHHAANN RREEAALL EESSTTAATTEE AAPPPPRRAAIISSAALL,, IINNCC..
RRiicckk LL.. MMaahhaann
Arkansas Certified General #CG0307 Missouri Certified General #RA002537
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
2
LETTER OF TRANSMITTAL February 17, 2017
Client: Charles Newland 281 River Road Lakeview, Arkansas 72642 RE: Appraisal Report: Dear Charles, As per your request, I have inspected the above referenced property which is the subject of this report, gathered necessary data and made certain analysis that have enabled me to form an opinion of the market value of the subject property “AS IS” as of October 17, 2016, the date of value of this appraisal. Accordingly, I have based the report upon the following determinants:
� My inspection of the subject as of February 7, 2017 � A Cost Approach which involves a research of the market to provide a value for the subject
site as though vacant, as well as ascertaining the cost to construct the existing improvements � Because of the uniqueness of the subject structure, no comparable sales could be obtained.
Therefore, the Sales Comparison Approach was not developed in this assignment � Because of the uniqueness of the subject structure, and the subject being owner occupied,
there are no rental properties similar enough to the subject to use as comparables, therefore, the Income Approach was not developed in this assignment
Based on the analysis contained in the ensuing Appraisal Report, the market value conclusions of the subject property are set forth as follows:
MARKET VALUE CONCLUSION
Appraisal Premise Date of Value Value Conclusion
Estimate of Market Value October 17, 2016 $520,000
The appraisal report sets forth the identification of the property, the assumptions and limiting conditions, pertinent facts about the area and the subject property, comparable data, the results of the investigation and the analysis and reasoning leading to the conclusions set forth. The appraisal assignment was not contingent upon developing or reporting predetermined results, such as a requested minimum valuation, a specific valuation, or the approval of a loan. We take no responsibility for any events, conditions, or circumstances affecting the market that exists subsequent
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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to the effective date of this appraisal. This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and addenda. The purpose of this Appraisal Report is to estimate the market value of the property described in the body of this report “AS IS” as of October 17, 2016. At your request, the date of value is October 17, 2016. It is the understanding that October 17, 2016 is the date of death of Ms. Katherine L. Newland who was the trustee of the trust which holds title to the subject property. It is understood that the function of this appraisal is to assist Mr. Charles Newland in establishing the market value of the subject property as of October 17, 2016. The appraisal covers the real property only, and no furniture, equipment, or personal property is included in the value estimate. The analysis contained in this appraisal is based upon assumptions and estimates that are subject to uncertainty and variation. These estimates are often based on data obtained in interviews with third parties, and such data are not always completely reliable. In addition, we make assumptions as to future behavior of consumers, and the general economy, which are highly uncertain. It is, however, inevitable that some assumptions will not materialize and that unanticipated events may occur which will cause actual achieved operating results to differ from the financial analyses contained in this report, and these differences may be material. Therefore, while our analysis was conscientiously prepared on the basis of our experience, and the data available, we make no warranty of any kind that the conclusions presented will, in fact, be achieved. Additionally, we have not been engaged to evaluate the effectiveness of management, and we are not responsible for future marketing efforts, and other management actions upon which actual results may depend. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformance with our interpretation of the requirements and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and Mahan Real Estate Appraisal, Inc. standards. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis or if Mahan Real Estate Appraisal, Inc. can be of further service to you, we would welcome the opportunity. Respectfully Submitted, Rick L. Mahan, Appraiser RLM/lam
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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TABLE OF CONTENTS
INTRODUCTION ........................................................................................................ 1
LETTER OF TRANSMITTAL ....................................................................................................................... 2
TABLE OF CONTENTS .............................................................................................................................. 4
APPRAISER'S CERTIFICATION .................................................................................................................. 5
APPRAISER'S STATEMENT OF LIMITING CONDITIONS .............................................................................. 5
PHOTOGRAPH OF SUBJECT/SUMMARY OF SALIENT FACTS AND CONCLUSIONS ......................................... 8
APPRAISAL SPECIFICS ............................................................................................. 9
INTENDED USE AND INTENDED USER OF REPORT .................................................................................... 9
INTEREST VALUED .................................................................................................................................10
APPRAISAL REPORTING TYPE .................................................................................................................10
DATE OF INSPECTION ............................................................................................................................10
DATE OF VALUE .....................................................................................................................................10
DATE OF REPORT ...................................................................................................................................10
SCOPE OF THE APPRAISAL ......................................................................................................................11
NOTICE OF PENDING CONTRACTS ..........................................................................................................11
HISTORY OF OWNERSHIP .......................................................................................................................12
EXPOSURE TIME .....................................................................................................................................12
EXTRAORDINARY ASSUMPTIONS ............................................................................................................12
HYPOTHETICAL CONDITIONS .................................................................................................................12
LOCATION ANALYSIS ............................................................................................. 14
COUNTY AND CITY DATA ........................................................................................................................14
NEIGHBORHOOD DATA ...........................................................................................................................17
SUBJECT PROPERTY IDENTIFICATION .................................................................. 19
SUBJECT PROPERTY DATA ......................................................................................................................19
BUILDING SKETCH .................................................................................................................................22
PLAT SKETCH .........................................................................................................................................23
AERIAL MAP ...........................................................................................................................................25
FLOOD PLAIN MAP .................................................................................................................................26
HIGHEST AND BEST USE ANALYSIS ....................................................................... 27
VALUATION PROECEDURES AND METHODOLOGIES ............................................. 29
VACANT LAND SALES ..............................................................................................................................31
COST APPROACH (IMPROVEMENTS) ........................................................................................................37
SALES COMPARISON APPROACH .............................................................................................................39
INCOME APPROACH ................................................................................................................................40
RECONCILIATION ................................................................................................... 41
FINAL CONCLUDED VALUE ......................................................................................................................41
QUALIFICATIONS OF THE APPRAISER ................................................................... 42
ADDENDA ................................................................................................................ 44
ADDITIONAL SUBJECT IMAGES ...............................................................................................................44
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APPRAISER’S CERTIFICATION CERTIFICATION: I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The report analyses, opinions, and conclusions are limited only by the reported assumptions and
limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
3. I have no present or prospective interest in the property that is the subject of this report and no
personal interest with respect to the parties involved. 4. I have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment. 5. I have not provided services regarding the subject property within the three-year period
immediately preceding acceptance of this assignment, as an appraiser or in another capacity. 6. I have made a personal inspection of the property that is the subject of this report. 7. No one provided significant real property assistance to the person signing this certification.
8. The Appraiser conducted the appraisal and prepared the Appraisal Report in full compliance with
the Uniform Standards of Professional Appraisal Practice (USPAP), and all applicable state and federal laws and regulations.
9. The appraisal of the subject property was conducted, and the appraisal report was prepared, by
one, or more, qualified and duly licensed or certified real estate appraisers in compliance with applicable state and federal laws.
10. The Appraiser, Rick L. Mahan, who conducted the appraisal of the subject property has knowledge
and experience in appraising this type of property in the market area within which the subject property is located.
11. The Appraiser was not provided any predetermined or desired valuation of the subject property by
the client or any third party.
12. The Appraiser was not influenced by the client or any third party in determining the valuation of the subject property and no attempt was made by the client or any third party to influence the valuation of the subject property through coercion, collusion, compensation, inducement, intimidation, bribery or in any other manner.
APPRAISER’S STATEMENT OF LIMITING CONDITIONS CONTINGENT AND LIMITING CONDITIONS: The certification of the Appraiser appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the Appraiser in the report.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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1. The Appraiser assumes no responsibility for matters of a legal nature affecting the property
appraised or the title thereto, nor does the Appraiser render any opinion as to title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership.
2. Any sketch in the report may show approximate dimensions and is included to assist the reader in
visualizing the property. The Appraiser has made no survey or the property. 3. The Appraiser is not required to give testimony or appear in court because of having made the
appraisal with reference to the property in question, unless arrangements have been previously made therefore.
4. Any distribution of the valuation in the report between land and improvements applies only under
the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used.
5. The Appraiser assumes that there are no hidden or unapparent conditions of the property,
subsoil, or structures, which would render it more or less valuable. The Appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors.
6. Information, estimates, and opinions furnished to the Appraiser, and contained in the report, were
obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the Appraiser can be assumed by the Appraiser.
7. Neither all, nor any part of the content of this report, or copy thereof (including conclusions as to
the property value, the identity of the Appraiser, property designations, reference to any professional appraisal organizations, or the firm with which the Appraiser is connected), shall be used for any purposes by anyone but the client specified in the report, professional appraisal organizations, any state or federally approved financial institution, any department, agency, or instrumentality of the United States or any state of the District of Columbia, without the previous written consent of the Appraiser; nor shall it be conveyed by anyone to the public through advertising, public relations, news, sales, or other media, without the written consent and approval of the Appraiser.
8. ENVIRONMENTAL DISCLAIMER: The value estimated in this report is based on the
assumption that the property is not negatively affected by the existence of hazardous substances or detrimental environmental conditions. The appraiser is not an expert in the identification of hazardous substances or detrimental environmental conditions. The appraiser’s routine inspection of and inquiries about the subject property did not develop any information which indicated any apparent significant hazardous substances or detrimental environmental conditions which would affect the property negatively, it is possible that tests and inspections made by a qualified hazardous substance and environmental expert would reveal the existence of hazardous materials and environmental conditions on or around the property that would negatively affect its value.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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9. LEAD BASED PAINT: The presence of lead based paint was NOT observed during the routine inspection of the subject property. Also the inquiries about the subject property did not develop any information which indicated any lead based paint. Any structures constructed prior to 1978 should be tested as to the existence of lead based paint. Since the subject was constructed in , this value opinion is predicted on the assumption that there is no lead based paint on the subject property. However, it should be noted the appraiser has not been trained, nor is qualified to detect specific hazardous substances or conditions such as lead based paint. It is recommended the client retain an expert to fully evaluate any environmental concerns with the subject property.
10. The American Disabilities Act (ADA) became effective January 26, 1992. The appraiser has
not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the property and a detailed analysis of the requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property.
DATE: February 17, 2017 ________________________________________
Rick L. Mahan
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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SUMMARY OF SALIENT FACTS AND CONCLUSIONS_________
PROPERTY APPRAISED Newland’s Office, Conference Center and Penthouse Structure and Boat Dock
OVERALL VIEW OF SUBJECT PROPERTY
APPRAISAL DATE DATE OF INSPECTION DATE OF VALUE DATE OF REPORT
February 7, 2017 October 17,2016 February 22, 2017
PURPOSE OF APPRAISAL Estimate Market Value
SIZE OF SITE 0.44 Acre
IMPROVEMENTS 2-Structures – Office/Conference Center/Penthouse and Boat Dock
PRESENT OCCUPANTS Newlands
ZONING or RESTRICTIONS No Zoning and No Restrictions
HIGHEST AND BEST USE
Commercial
INDICATED VALUE SUBJECT AS THOUGH VACANT: INDICATED VALUE:COST APPROACH: INDICATED VALUE: SALES COMPARISON APPROACH INDICATED VALUE: INCOME APPROACH
$ 120,000 $520,000
Not Developed Not Developed
CONCLUSION OF MARKET VALUE $ 520,000
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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Appraisal Specifics___________________________ Purpose of the Appraisal The purpose of this appraisal is to provide the appraiser’s best estimate of the market value of
the subject real property as of the effective date. According to the Dictionary of Real Estate
Appraisal, Sixth Edition, Appraisal Institute, the definition of market value used by agencies that
regulate federally insured financial institutions in the United States is as follows:
A type of value that is the major focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and refined, such as the following: 1. The most widely accepted components of market value are incorporated in the following
definition: The most probable price, as of a specific date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
2. Market value is described, not defined, in the Uniform Standards of Professional Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that presumes the transfer of a property (i.e. a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories:
1. The relationship, knowledge, and motivation of the parties (i.e. seller and buyer). 2. The terms of sale (e.g. cash, cash equivalent or other terms): and 3. The conditions of sale (e.g., exposure in a competitive market for a reasonable time
prior to sale).
Intended Use and Intended User of Report
The intended user of the appraisal report is Mr. Charles Newland. The appraisal report is
exclusively prepared for Mr. Charles Newland.
The intended use of the appraisal is to assist Mr. Newland with establishing current market
value for the property as of the date of death of Ms. Katherine L. Newland. Ms. Newland passed away
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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on October 17, 2016. Any other use without the consent of the appraiser and Mr. Newland is strictly
prohibited.
Interest Valued
The real estate interest appraised is that of ownership in fee simple estate subject to
easements of record and the property is appraised as if free and clear of liens and encumbrances.
For the purpose of clarification, fee simple estate is defined from The Dictionary of Real Estate
Appraisal, Sixth Ed., Appraisal Institute, as follows:
Absolute ownership unencumbered by any other interest of estate, subject only to the limitations imposed by the government powers of taxation, eminent domain, police power, and escheat.
Appraisal Reporting Type
According to the Uniform Standards of Professional Appraisal Practice effective January 1,
2016, this is considered an Appraisal. According to USPAP an Appraisal is defined as follows:
(noun) The act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services. Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g. not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).
Date of Inspection
The date of inspection of the subject property was February 7, 2017.
Date of Value
The date of value is October 17, 2016.
Date of Report
The writing of this report began February 17, 2017 and was completed February 22, 2017.
Therefore, the date of the report is February 22, 2017.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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Scope of the Appraisal
According to the Uniform Standards of Professional Appraisal Practice, it is the appraiser’s
responsibility to determine the appropriate scope of work. USPAP defines the scope of work as:
The type and extent of research and the analysis in an assignment. Scope of work includes, but is not limited to, the following:
o the degree to which the property is inspected or identified; o the extent of research into physical or economic factors that could affect
the property; o the extent of data research; and o the type and extent of analysis applied to arrive at opinions or
conclusions
The following information defines the scope of work taken by the appraiser(s):
o The appraiser received the appraisal order from Mr. Charles Newland on December 21, 2016.
o The appraiser inspected the subject site and existing improvements on February 7, 2017.
o During the inspection of the property the appraiser measured and observed the condition and quality of the existing improvements. The adjoining properties and subject neighborhood were also observed.
o The appraiser researched and analyzed the ownership and history of ownership of the subject property.
o The appraiser researched information of comparable land sales, improved properties and properties being used for rental income-producing purposes similar to the subject.
o The results of this research was that no sales of improved properties similar enough to the subject were found and no properties similar enough to the subject being used as rental income-producing purposes were found for a comparison to the subject.
o The appraiser confirmed and analyzed the data in order for application to be made to the Cost Approach.
o In the Cost Approach, the appraiser estimated the market value of the subject site as though vacant along with the cost to construct the existing structure. The costs were estimated based on the Marshall Valuation Cost Manual.
o This data was then reconciled into a final estimate of market value for the real estate only.
Notice of Pending Contracts
To the knowledge of the appraiser and general public, the subject property is not under
contract to be sold. The subject property is not currently being offered for sale.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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History of Ownership
Title to the subject property is currently held by Charles W. Newland, Trustee.
Exposure Time
Exposure Time is defined from the Uniform Standards of Professional Appraisal Practice, 2016-
2017 Edition as follows:
Estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.
In estimating the exposure time for the subject property, sales of similar properties to the
subject were reviewed in the Sales Comparison Approach. In the appraiser’s opinion the Exposure
Time for the subject is twelve months.
Extraordinary Assumptions
Extraordinary Assumptions is defined from The Uniform Standards of Professional Appraisal
Practice, 2016-2017 Edition, as follows:
An assumption, directly related to a specific assignment, as of the effective date of the assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Comment: Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis.
This assignment does not contain Extraordinary Assumptions.
Hypothetical Conditions
Hypothetical Condition is defined from The Uniform Standards of Professional Appraisal
Practice, 2016-2017 Edition, as follows:
A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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This assignment does not contain Hypothetical Conditions.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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Location Analysis______________________
County and City Data Lakeview, Arkansas is located in the northwest part of Baxter County which is in the
northcentral part of Arkansas. The town is situated 150 miles north of Little Rock, Arkansas, and
approximately 100 miles southeast of Springfield, Missouri. Lakeview is located approximately eight
miles northwest of Mountain Home, Arkansas, the county seat of Baxter County and the hub of most
economic activity in the general area
Mountain Home is a city in and the county seat of Baxter County, Arkansas, United States, in
the southern Ozark Mountains near the northern state border with Missouri. As of the 2010 Census,
the city had a population of
12,448. A total of 41,307
persons lived within the city and
micropolitan combined, which
encompasses the majority of
Baxter County. In many ways, a
more important statistic to
consider is that within a 55-mile
radius, the population is 256,678.
Mountain Home, Arkansas
and the Twin Lakes area are
nationally recognized for not only
being a top notch vacation destination, but also for being an idyllic place to retire and relocate.
Publications including the Wall Street Journal, America's 100 Best Places to Retire, Where to Retire
and Outdoor Life, all rate Mountain Home at the top. Not only do the ratings show that Mountain
Home is a great place to live, but also for businesses to thrive. There are several factors that
contribute to making Mountain Home the perfect place to live.
According to information supplied by the Mountain Home Chamber of Commerce, six factors
make Mountain Home a good place to live and do business:
• Mountain Home has a thriving economy and attracts business from seven surrounding counties.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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• Mountain Home has a large base of employers from a number of different industries, providing diverse employment opportunities.
• Mountain Home is a national tourist destination, creating many opportunities in the tourism industry.
• Mountain Home enjoys access to cutting edge health care. • Mountain Home's infrastructure includes expedient transportation and telecommunication
services. • Mountain Home is also home to Arkansas State University-Mountain Home, allowing families
access to higher education. Not only does the university offer educational opportunities, but employment as well. One of Mountain Home's largest employers is Baxter Regional Medical Center, which is one of the nation's premier health care providers.
Other industries and businesses that have opportunities for employment include:
• American Stichco • Bass Cat Boats • Baxter Healthcare • Computer Automation Systems • Eaton Corporation • Epoxyon/ Hamilton Scientific • Full-Boar Manufacturing • Ranger Boats • Wapsi Fly
The unemployment rate in
Mountain Home, AR, is 6.40%, with
job growth of 1.57% while future job
growth over the next ten years is
predicted to be 36.70%. The sales
tax rate is 7.50%. Income tax rate is
7.00%.
According to information
provided in the Baxter Bulletin, Baxter
County has seen an increase in sales
tax revenue for several years.
• Baxter County’s record sales tax revenue in 2014 was $6.23 million • Mountain Home’s sales tax revenue experienced a 4.9% increase over 2013 with $3.6 million • Sales tax revenue for the county increased in January 2015 by 10% over 2014
Further favorable economic trends for Mountain Home and Baxter County including the
continuing increase in population are an increase in tourism dollars, the continual growth of the ASU
Mountain Home campus, the U.S. Highway 412/62 Bypass, and the Baxter County Regional Hospital.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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In addition, recent construction has begun for new restaurants on the east side of the city, a Hobby
Lobby in the central business district opened in 2014, and a recently erected grocery store and bank
branch have opened on the west side near the ASU-MH campus.
The Mountain Home area serves as the trade and employment center for the north central
region of Arkansas. The area’s largest employer is Baxter Regional Medical Center, one of the most
impressive health care providers in the nation.
A number of nationally-recognized industries already operate in the Mountain Home Area.
They include:
• Eaton Corporation • The world's second-largest facility of Baxter Healthcare Corp., a subsidiary of Baxter
International, Inc. Home-grown industries include:
• American Stitchco • Bass Cat Boats • Full-Boar Manufacturing • Ranger Boats • Wapsi Fly
Mountain Home has ample telecommunications and shipping services to enable many area
businesses to conduct business around the world. The Mountain Home area is served by three
telephone companies – CenturyLink, Northern Arkansas Telephone Company (NATCO), and Yelcot –
offering quality telecommunications services, including some of the most sophisticated available. Fiber
optic technology, hi- speed Internet, ISDN, CLASS and Custom Calling features are available in most
portions of the Mountain Home area. Other utilities in the area include:
• Electrical service: Entergy, Inc. and North Arkansas Electric Cooperative • Natural gas service: SourceGas • Cable TV: Suddenlink Communications • Water and sewer services: inquire at
city hall • Garbage pickup and recycling: IESI,
Methvin Sanitation
Perhaps the largest attractions to the
Mountain Home area are the recreation facilities.
Mountain Home is physically located between
two of the largest lakes in the state, Norfork to
the east and Bull Shoals to the west. Combined,
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
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these two lakes form approximately 1,700 miles of shoreline open to fishing, camping, swimming and
relaxation. In addition, Mountain Home is bounded on the east, west and south by the Norfork,
White and Buffalo National Rivers, respectively. White River flowing out of Bull Shoals Lake provides
some of the best trout fishing in the United States. In recent years, Field and Stream chose Mountain
Home as the Number Two destination for hunting and fishing. Outdoor Life followed by choosing
Mountain Home as the Number One fishing locale in the country.
The public school district, Mountain Home Public Schools, encompasses some 330 square
miles and serves over 4,000 from kindergarten through 12th grade. The public school are comprised
of six campuses including the Mountain Home High School (grades 10-12), Mountain Home Junior
High (grades 8-9), Pinkston Middle School (grades 5-7), Guy-Berry Intermediate School (grade 4),
Nelson-Wilks-Herron Elementary school (grades 1-3), and the Kindergarten center. The average per
pupil spending is $7,893 with 14.8 students per teacher.
The Arkansas State University - Mountain Home is a public, open access, two-year campus of
Arkansas State University located on the west side of the city. The excellent learning facility provides
higher education for more than 1500 students.
The city operates under the mayor-city council form of government. The mayor serves a four-
year term, while members of the city council serve two-year terms. The city council consists of eight
aldermen. The current city budget is over $19 million.
Mountain Home is served by U.S. Highway 412/62 and Arkansas Highways 5 and 201. The
city is facilitated by the Baxter County Regional Airport, located just outside Mountain Home. Two
million dollars of improvements have been added in the past few years. The airport has a paved,
lighted runway measuring 5,001 feet and a new 6,800 square foot terminal.
Additional information about Mountain Home, Arkansas can be found at the following websites: www.bestplaces.net/zip-code/arkansas/mountain_home/72653; www.cityofmountainhome.com; www.enjoymountainhome.com;
Neighborhood Data
The land in the subject neighborhood is desirable for both single family residences, as well as
some with commercial purposes. The neighborhood lays along the banks of White River. Many of
the single family residences have frontage on both River Road and the river. River frontage property
is very desirable in this area because the location is a short distance downstream from Bull Shoals
Dam which greatly lessens the possibility of flooding. In addition, public water is accessible as it runs
along the blacktop county road. For those who enjoy lake activities, access to Bull Shoals Lake is only
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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a couple of miles from the neighborhood. Electricity is served to the neighborhood from North
Arkansas Electric Cooperative; telephone is served from CenturyTel; water is provided from Midway -
Lakeview Water Association.
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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Subject Property Identification________________
Subject Property Data
Location Information Property: Newland’s Office, Convention Center and Penthouse Rental
Address: 281 River Road
City, State, Zip: Lakeview, Arkansas 72642
County: Baxter
Legal Description: A part of Lot 9 of Riverside Terrace Subdivision
Zoning Zoning Map Source Description
No Zoning Baxter County Officials The subject is not located within any town or city. Baxter County does not have county-wide zoning; therefore, the subject is not encumbered with any zoning ordinances.
Assessment Information
Year Parcel Assessment #
2015 002-09371-000
Land Information Gross Land Area: 0.44 Acre = 19,166 s.f.
Description:
The subject tract is an irregular-shaped parcel of land that fronts along the northern bank of the White River for approximately 120-feet. The property has a sloping terrain but nearly level on the north portion then sloping downward to the river. The dimensions of the tract are estimated to be 100-ft. along the north side, 160-ft. along the west side, 120-ft. along the south side which is along the river, and 220-ft. along the east side. Approximately 20+- years ago an extensive river bank stabilization was completed to the subject site. This stabilization included shaping the river bank then placing large boulders and rocks along the back to prevent erosion. Because of the rising and falling of the water level in White River without the stabilization the river bank will typically erode ultimately
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losing land area.
In Flood Plain: Yes
Flood Plain Map Number: #05005C0125E as of December 3, 2010
Encumbrance/Easement:
Based on the physical inspection, the site is not encumbered with any adverse easements. There are apparently some utility easements for service lines. None of these in any way create unfavorable conditions.
Surplus Land Area(SF): None
Environmental Issue: No adverse environmental issues noted or anticipated
At Site Utilities Water: Available from Midway – Lakeview Water Association
Sewer: Available from Private Septic System
Electricity: Available from North Arkansas Electric Cooperative
Gas: Natural Gas Not Available
Telephone: Available from CenturyLink
The subject property is improved with two structures.
• Building #1 is a three level structure. The first level was designed and constructed to be used as the office area for Newland’s Lodge. The second level was designed and constructed to be used as a conference center while the third level was designed and constructed to be used either as a residence or rental unit.
• Building #2 is a boat dock that is floating on the river.
Building #1 – Office, Conference Center and Penthouse
Gross Building Area (SF): 4,051 s.f. Source: Appraiser’s Measurements
Rentable Area (SF): 2,851 s.f. Source: Appraiser’s Measurements
Efficiency Ratio: 100%
No. of Rental Areas: Two Largest Rental Area: 1,576 s.f. – Conference Center
Construction Information
Property Condition: Good Effective Age: 20 Yrs.
No. of Stories: Three Construction Quality: Good
Roof Type: Gable-Style with Asphalt-Based Roof Shingles
Ceiling Height (feet): Varies from 8-ft. to 16-ft.
Type of Heating & Cooling:
Several Electric Mini-Split Heat Pump Systems
Construction Description:
Building #1 is a three story structure. The second and third levels were added to the first level during the years 1990 to 1993. The exterior of Building #1 is redwood.
• The first level contains 1,200 square feet. This level contains a ¾ bath, small kitchen area, a private office and large open area for clients to assemble. The interior of the first level is a mixture of wood including redwood, oak and cedar. The concrete floor is covered with ceramic tile. Heating and cooling is provided by a central electric heat pump and a mini-split heat pump unit. A wood burning fireplace is located in the large open area of the building. A large wood deck
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runs along three sides of the first level. • The second level contains 1,576 square feet. This level
includes two ¾ baths; the remaining area is open and being used as a conference center. The wood floors are covered with carpet and the ceiling has exposed laminated beams with wood ceiling. The second level is heated with electric baseboard heaters plus a mini-split electric heat pump. The south wall is mostly glass which provides a good view of the river. A large wood deck runs along the two sides and the side facing the river.
• The third level of Building #1 is the penthouse which includes 1,275 square feet. The area includes two bedrooms, one full bath, one ¾ bath, a complete kitchen and an open dining and living area. The flooring is wood, as are the ceilings. The ceilings range in height from a cathedral or vaulted style. The interior walls are painted drywall and the trim is wood. The kitchen features a JennAir range/oven, refrigerator, dishwasher and microwave oven. The third level is heated and cooled with three mini-split electric heat pumps. A large wood deck off the third level overlooks the White River. Access to the third level is along a set of stairs from the second level.
Property Renovated: Approximately 4 to 5 years ago new roof shingles were installed.
Further Description:
According to the Marshall Valuation Cost Manual, the subject building has three distinct areas. The first level is considered a Class “D” Average Quality Retail Store. The second level is considered t be a Class “D” Good Quality Convention Center. The third level is considered to be a Class “D” Good Quality Single Family Residence.
Building #2 – Boat Dock
Gross Building Area (SF): 1,463 s.f. Source: Appraiser’s Measurements
Deck Area (SF): 541 s.f. Source: Appraiser’s Measurements
Construction Information
Year Built: Unknown Property Condition: Average
Actual Age: Unknown Effective Age: 20 Yrs.
Construction Quality: Average
Roof Type: No Roof
Construction Description:
The boat dock is a wood frame structure with encapsulated flotation. The dock has 2-inch thick treated lumber floor. The dock is divided into five 10-ft. wide by 19-ft. long boat slips. A 3.5-ft. wide deck runs along the shore side of the structure with five 2.5-ft. wide and one 4-ft. wide fingers extending out from the 3.5-ft. wide deck. As stated previously, there are 10-ft. between each of the fingers. The dock is connected to electric service.
Property Renovated: The encapsulated flotation was installed in 2011.
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Building Sketch First Level
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Building Sketch Second Level
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Building Sketch Third Level
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Aerial Map
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Flood Plain Map
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Highest and Best Use Analysis__________________
Four criteria are examined in order to determine the highest and best use of the subject
property. The criteria and their applicability to the subject, both “as vacant” and “as improved” are as
follows:
• Legally Permissible: a legally permissible use is determined primarily by current zoning regulations. However, other considerations such as long-term leases, deed restrictions, and environmental regulations may preclude some possible highest and best use.
• Physically Possible: the size, shape and topography affect the uses to which land
may be developed. The utility of a parcel is dependent on its frontage and depth. Sites with irregular shapes may be more expensive to develop, and topography or subsoil conditions may make utilization too costly or restrictive. Highest and best use as improved also depends on physical characteristics such as condition and utility.
• Financially Feasible: the use of the property is analyzed to make a determination as
to the likelihood that the property is capable of producing a return which is greater than the combined income needed to satisfy operation expenses, debt service, and capital amortization. Any use that is expected to produce a positive return is classified as financially feasible.
• Maximally Productive: the use that provides the highest rate of return among
financially feasible uses is the highest and best use. The use of the land must yield a profitable net return, and the quantity of land devoted to any specific use must be limited to that quantity which will yield a maximum return to each owner.
Highest and Best as Vacant
Legally Permissible:
Considering the subject site as vacant and available for use, the current zoning would be the legal restraint on what improvements could be placed on the site. The subject tract is not encumbered with any zoning ordinances or restrictions.
Physically Possible:
The size, shape, and terrain are conducive for many types of development. The utilities serving the subject site are adequate for many uses. The subject’s size of 0.44 acre does limit the possible uses but is sufficient to allow development. The subject site’s physical aspects do not impose any apparent physical limitations on development. Being adjacent to the White River, the site is within the flood plain area.
Financially Feasible:
Financially feasible refers to legal uses which are physically possible and have a sufficient demand to produce a positive return. Once the physically possible and legally permissible potential land uses have been determined, the next step in estimating the highest and best use is to determine which uses are economically feasible. The residential and commercial market along the banks of the White River especially in the subject neighborhood have proven
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to be very good. The feasibility of a commercial land use is evidenced by other established commercial land uses in the immediate area. Based upon these observations, the use as a commercial reflects the highest and best uses.
Maximally Productive:
With consideration to the highest legal use as allowed by having no zoning or restrictions, the consideration must be given to the financial consequences of building other uses on the site. The returns to the investor can be tested to establish which would return the most value to the site.
Additional Considerations:
An additional use which must be considered as a part of the “highest and best as if vacant” is the possibility of the property being left vacant and held for speculative investment. This would only be the choice of uses if there was no present demand for the use that meets the other tests. This is not the case in the present real estate market where the subject property is situated. As stated previously, the area is an estimated 95% built-up with single family and commercial land uses.
Highest and Best as Improved
Legally Permissible:
As discussed, the subject site is not zoned and has no legal restrictions; therefore, a variety of property uses are possible.
Physically Possible:
The physical characteristics of the subject improvements were discussed in detail in the Subject Property Identification section of this report. Overall, the construction quality of the subject improvements is considered to be of Good Construction Quality. The overall design and functionality of the improvements are considered very adequate for their designed and constructed use. While it would be physically possible for a variety of uses, based on the design of the improvements, the continued use of the property for office, conference center and rental or residential unit purposes would be the most functional use.
Financially Feasible:
Financially feasible refers to legal uses which are physically possible and have a sufficient demand to produce a positive return. Once the physically possible and legally permissible potential improvement uses have been determined, the next step in estimating the highest and best use is to determine which uses are economically feasible. As improved, the subject structure is one of a kind. The design and even the construction material are unique to other resort or lodge offices. The design of Building #1 is acceptable in the market and represents maximum utilization of the site as improved. Please refer to the Subject Property Identification section for further information.
Maximally Productive:
With consideration to the highest legal use as allowed by having no zoning regulations, the consideration must be given to the financial consequences of building other uses on the site. The returns to the investor can be tested to establish which would return the most value to the site.
Highest and Best Use Summary
Highest and Best Use as Vacant: Commercial Highest and Best Use as Improved: Commercial
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Valuation Procedures and Methodologies _______
Current appraisal standards recognize three basic approaches to real estate value. These are
identified as the Cost, Income, and Sales Comparison Approaches.
• The Cost Approach is a set of procedures through which a value indication is derived for the fee simple estate by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive or profit; deducting depreciation from the total cost; and adding the estimated land value. Adjustments may then be made to the indicated fee simple estate in the subject property to reflect the value of the property interest appraised. . (The Dictionary of Real Estate, Sixth Edition, Appraisal Institute).
Costs factors used in this analysis are based on the Marshall & Swift Publication Company,
Marshall Valuation Service Cost Handbook, with adjustments made for quality, time and locale.
The process implemented, establishing an estimated market value of a piece of property for
the Cost Approach involves determining the Vacant Land Value of the site and adding the
estimated depreciated value of the improvements to the site.
Following the vacant land value process, then, is a complete list of the improvements to the
site, along with the estimated basic cost of these improvements. After determining the cost new,
time and locale adjustments will be applied; then, the adjustment cost new will be depreciated to
estimate the depreciated value of the improvements to the site.
After the final depreciated value of the improvements are estimated, the vacant land value
will be added to provide a total indicated property value by the Cost Approach.
• The Sales Comparison Approach The process of deriving a value indication for the
subject property by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. The sales comparison approach may be used to value improved properties, vacant land when an adequate supply of comparable sales is available. (The Dictionary of Real Estate, Sixth Edition, Appraisal Institute)
Critical in this valuation methodology, is the availability of sufficient market comparables
with which to make valid comparisons. After an extensive market search, it was concluded that no
sale of a property adequately similar to the subject had sold within the past five years.
Consequently, an effort to develop an indicated value from comparables unlike the subject would
result in an indicated value that would be misleading. Consequently, the Sales Comparison
Approach will not be developed.
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• The Income Capitalization Approach Specific appraisal techniques applied to
develop a value indication for a property based on its earning capability and calculated by the capitalization of property income. (The Dictionary of Real Estate, Sixth Edition, Appraisal Institute).
A determination is necessary as to whether the subject property is currently or has ever
been used for rental income-producing purposes. The third level of the subject structure is used
for a rental income-producing purpose. However, this rental is based on nightly or weekly rentals
to people on vacations, not on a yearly basis. Some type of income approach could be calculated
but this would only be for the third level since the first level which is used as an office for the
adjoining lodges and fishing service does not generate rental income. Also, the second level which
is used a conference center does not generate rental income on a steady basis. For these reasons,
it is the appraiser’s opinion that an effort to calculate an indicated market value from the Income
Approach would result in an indicated value that would be misleading. Therefore, the Income
Approach will not be developed in this assignment.
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Vacant Land Sales _______
The following pages list vacant land sales that are considered comparable to the subject
property based on zoning, factors of economic circumstance, and developmental attributes.
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Comparable Land Sale #1
Location Information
1481 River Road Lakeview, AR 72642
Grantor: Ralls
Grantee: Wood
Date: October 31, 2012
Price: $125,000
Terms: Cash to Seller
Land Area (Acres): 0.75 Acres Square Feet: 32,670 s.f.
Unit Price Per Acre: $166,667 per acre Price per Sq.ft.: $3.83 per s.f.
Verification: MLS/County Records Recording Instrument: 2012-9066
Shape: Irregular Topography: Level to Gently Slopg
Exposure Time: 420 Days on Market Parcel Number: 002-09408-000
Frontage: 105-ft. along White River = $1,190 per river front foot
Sale Comment: Typical Arms-Length
Property Remarks:
The vacant land sale is located fronting along River Road and White River. The tract has access to public water, electricity and telephone. The property has a good terrain which makes for an easy walk to the river bank. The property has now been improved with a single family dwelling that last sold at a price of $485,000.
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Comparable Land Sale #2
Location Information
Baxter County Road 574 Lakeview, AR 72642
Grantor: George Daker
Grantee: Gary & Danette Stubenfoll
Date: October 12, 2016
Price: $100,000
Terms: Cash to Seller
Land Area (Acres): 1.12 Acres Square Feet: 48,787 s.f.
Unit Price Per Acre: $89,286 per acre Price per Sq.ft.: $2.05 per s.f.
Verification: MLS/County Records Recording Instrument: L201608855
Shape: Irregular Topography: Nearly level
Exposure Time: 6 Days on Market Parcel Number: 002-10655-000
Frontage: 100-ft. of frontage along White River = $1,000 per River Front Foot
Sale Comment: Typical Arms-Length
Property Remarks:
The vacant land sale is located a short distance off River Road near the town of Lakeview, Arkansas. The property has access to public water, electricity and telephone. The tract has a nearly level terrain that provides good access to the river’s edge.
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Comparable Land Sale #3
Location Information
Wheatstone Place Cotter, AR 72626
Grantor: Edward & Colleen Musil
Grantee: Go Frogs! LLC
Date: May 6, 2016
Price: $100,000
Terms: Cash to Seller
Land Area (Acres): 0.48 Acre Square Feet: 20,909 s.f.
Unit Price Per Acre: $208,333 per acre Price per Sq.ft.: $4.78 per s.f.
Verification: MLS/County Records Recording Instrument: L201603812
Shape: Irregular Topography: Level
Exposure Time: 393 Days on Market Parcel Number: 002-10680-017
Frontage: 100-ft. Frontage Along White River = $1,000 per River Front Foot
Sale Comment: Typical Arms-Length
Property Remarks:
The vacant land sale is located a short distance off Denton Ferry Road which is upstream from the town of Cotter, Arkansas, in an area commonly known as the Wildcat Shoals area of White River. This lot is basically level with a gentle slope downward to the water’s edge. Electricity and telephone are readily accessible. A well must be installed for water and septic system for sewage disposal.
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Vacant Land Value with Comps Breakdown __
Discussion and Analysis
Property Rights Conveyed: All of the sales were determined to be Property Rights Fee Simple Estates. As such, no adjustment was indicated for any of the sales. Financing Terms: A review of the available financing terms with regard to each of the respective sales did not indicate terms that would affect the cash equivalency. As such, no adjustment for atypical financing terms was indicated. Condition of Sale: This element of comparison takes into account the possible motivation on the part of the buyer or seller in a sales transaction. The sales were all determined to be arms-lengths transactions. Market Conditions: All of the comparable sales occurred after October 2012. Given the nature of the market within this time period and the fact that appreciation levels have remained stable, the price levels of the sales are representative of today’s price levels. Location/Access: The subject site is in a good location with access to River Road. The three comparable sales are all also in a good location with good access to county roads. Physical Attributes: All of the sales were determined to have a similar topography and shape when compared to the subject. Furthermore, Sale #1 and Sale #2 had access to utilities that were the same as the subject. Sale #3 is considered some inferior as it did not have access to public water, even though the sale price per river front foot does not indicate this being a negative. Parcel Size: The comparable sales were all generally similar in terms of size. Typically, the market indicates an inverse relationship to size and unit price; the larger the parcel, the lesser the unit price. It was determined that the size differential in relationship to the respective price per river front foot was inconclusive. As shown, the larger sales transacted at similar levels to those of the smaller sales. Due to this relationship, it is concluded that the subject would transact at similar levels. Zoning/Restrictions: The subject nor any of the three sales are zoned which ultimately results in the same development potential as the subject.
Conclusion
Three vacant land sales were used for comparison to the subject site in order to gain an
indicated market value for the subject as though vacant. The analysis indicates a value range of
$1,000 to $1,190 per river front foot. In the final value conclusion, a land value of $1,000 per river
front foot was concluded. Considering the subject with 120-ft. along the river, the indicated market
value of the site as though vacant calculates as follows:
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120-ft. River Front x $1,000 per River Front Foot = $120,000.
The indicated market value of the site as though vacant rounds to: $120,000.
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Cost Approach (Improvements) __ _____
The following costs were developed from the Marshall Valuation Cost Manual. Though the
subject Building #1 is considered as a Class D, it does have three different building types.
• The first level is considered to be an Average Quality Retail Store.
• The second level is considered as a Good Quality Convention Center.
• The third level is considered as a Good Quality Single Family Residence.
As illustrated previously, Building #1 has an effective age of 20 years. With an overall life
expectancy of 60 years and based on a straight line depreciation calculation, results in a 33%
depreciation amount.
Building #2 is the boat dock which has an effective age of 20 years. With an overall life
expectancy of 40 years and based on a straight line depreciation calculation results in a 50%
depreciation amount.
An analysis of the costs follows:
Cost Approach Calculations
Area Type Square Foot Cost per Square Foot Subtotal
First Level Office 1,200 s.f. $88.75 $ 106,500
Area Type Square Foot Cost per Square Foot Subtotal
Second Level 1,576 s.f. $137.08 $ 216,038
Area Type Square Foot Cost per Square Foot Subtotal
Third Level 1,329 s.f. $118.39 $ 157,340
TOTAL $ 479,878
Less Physical Depreciation
Component Amount Subtotal
Depreciation (33%) $ 158,340
Total Cost of Building #1 After Physical Depreciation $ 321,538
Area Type Square Foot Cost per Square Foot Subtotal
Building#2 – Boat Dock 541 s.f. $27.00 $ 14,607
Less Physical Depreciation
Component Amount Subtotal
Depreciation (50%) $ 7,304
Total Cost of Building #2 Boat Dock After Physical Depreciation $ 7,303
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Site Improvements
Item Subtotal
Utilities $ 15,000
Bank Stabilization $ 50,000
Blacktop $ 8,000
Total Cost of Site Improvements $ 73,000
Vacant Land Value
Item Subtotal
Vacant Land Value $ 120,000
Final Value Estimate via Cost Approach
Building #1 Cost Less Physical Depreciation $ 321,538
Building #2 Cost Less Physical Depreciation $ 7,303
Plus Site Improvements $ 73,000
Plus Vacant Land Value $ 120,000
Cost Approach Value Indications $ 521,841
Rounded to $ 520,000
Conclusion
Thus, the indicated market value from the Cost Approach, rounded, is: $520,000.
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Sales Comparison Approach __ _____
The Sales Comparison Approach to value compares the subject to similar properties that have
sold or are under contract in the same or similar market. This approach is based on the principle of
substitution, which states that no commodity has a value greater than a similar commodity offering
similar uses, similar utility, and similar function that can be purchased within a reasonable time frame.
In other words, the market value of a property is set by the price of acquiring a substitute property,
which could provide the owner with similar utility. The principle of substitution also is crucial in
reconciling all three approaches to value, as it provides linkage in the underlying determination the
subject’s market value.
After an extensive market search it was concluded that no sale of an adequately similar
property to the subject has sold within the past five years. Consequently, efforts to develop an
indicated value from comparables that are unlike the subject would result in an indicated value that
would be misleading. Consequently, the Sales Comparison Approach will not be developed.
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Income Approach _ _ _____
The Income Approach to value is predicated on the premise that the property is designed to
return a flow of income to the owner when properly developed. The theory of the income approach
advocates that the value of the property is the present worth of the net income it will produce during
the remainder of its economic life. An investor or perspective purchaser should consider the income
producing ability of the property and the expected return on his investment.
The Income Approach measures market value by determining the price that open market
conditions would justify paying for a particular property's net income stream. This is specifically
accomplished for an appraisal by discounting the property's projected net income into present value
by use of a capitalization rate derived from sales of comparable properties. The property's net
operating income is the key term.
Net operating income is generally arrived at through a process that determines prevailing
open market rents, rates of vacancy and collection loss, and expenses necessary to operate the
property. Prevailing market rates of vacancy and collection loss and operating expenses are deducted
from prevailing market rent to produce the property's projected net income.
The third level of the subject structure is used for rental income-producing purposes. This
rental is based on nightly or weekly rentals to people on vacation, not on a yearly basis. Some type
of income approach could be calculated but this would only be for the third level. The first level
which is utilized as an office for the adjoining lodges and fishing service does not generate rental
income. The second level which is used as a conference center does not generate rental income
on a steady basis, either. For these reasons, it is the appraiser’s opinion that an effort to calculate
an indicated market value from the Income Approach would result in an value that would be
misleading. Therefore, the Income Approach will not be developed in this assignment.
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Reconciliation _ _ _____
Reconciliation and Final Concluded Value
The pertinent approaches to value have been summarized in this appraisal analysis. A summary of
the value conclusions of each of these individual approaches indicates the following:
Cost Approach - The cost of reproducing or replacing the subject property, less physical depreciation, plus the land value as determined through market comparison.
$520,000
Sales Comparison Approach - The value as indicated by recent sales of comparable properties, as adjusted to account for all differences in physical, location and economic characteristics.
Not Developed
Income Approach - The value which can be supported by the property's net earning capacity, based upon capitalization of the net income imputable to the property.
Not Developed
The Cost Approach indicates a market value of $520,000. This approach is given all of the
consideration. The subject Building #1 is a unique structure in a unique location. Consequently,
comparable sales were not found that would allow the development of the Sales Comparison Approach.
Further, Building #1 is not used for rental income-producing purposes on a yearly basis. Therefore, the
Income Approach could not be developed. Thus, as previously stated, the only approach developed in this
appraisal assignment is the Cost Approach.
Based on the foregoing, with the consideration being placed on the Cost Comparison Approach, the
market value of the subject has been concluded as follows:
MARKET VALUE CONCLUSION
Appraisal Premise Date of Value Value Conclusion
Estimate of Market Value October 17, 2016 $520,000
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Qualifications of the Appraiser _ _____ PROFESSIONAL EXPERIENCE • Arkansas State Certified General Appraiser, CG0307 • Missouri State Certified General Appraiser, RA002537 • Self-employed, full-time Real Estate Appraiser since March, 1985 • Licensed Real Estate Broker with the State of Arkansas • Real Estate Salesman April, 1978 through March, 1985
EDUCATION • Residential Appraisal Seminar, National Association of Realtors 1979 • Realtors National Marketing Institute 1981 • Graduate Realtors Institute, Course I 1981 • Real Estate Appraisal Principles/American Institute of Real Estate Appraisers 1985 • Residential Valuation/AIREA 1985 • Cash Equivalency/AIREA 1986 • Appraisal Report as a Communication Tool/AIREA 1986 • R-41C and the Appraiser/Society of Real Estate Appraisers and AIREA 1987 • Standards of Professional Practice/AIREA 1987 • Writing a Single Family Residential Demonstration Report/AIREA 1987 • Easement Valuation/International Right-of-Way Association 1989 • Legal Aspects of Easements/IRWA 1989 • Graduate Realtors Institute 301 1990 • Graduate Realtors Institute 302 1990 • Rate Extraction Application/AIREA 1990 • Marshall and Swift Cost Manual Seminar/IRWA 1990 • Capitalization Theory and Techniques Part A/AIREA 1991 • Feasibility Analysis of Highest and Best Use, Residential/AIREA 1992 • Capitalization Overview, Part A/AIREA 1992 • FIRREA: Overview and Practical Application/FIRREA Seminars 1994 • New Uniform Residential Appraisal Report (URAR)/NAIFA 1994 • Understanding Limited Appraisal, Residential/AIREA 1995 • Understanding Limited Appraisal, General/AIREA 1995 • Preparing Rural Appraisal Reports 1995 • Fundamental Rural Appraisals 1995 • Appraiser Accountability and Legal Liabilities Seminar 1995 • Standards of Professional Practice, Part A/USPAP 1995 • Arkansas Appraisal Licensing Board Continuing Education Seminar 1996 • Fannie Mae Appraisal Seminar 1996 • Diligence in Disclosure/U of A Cooperative Extension Service 1997 • Advanced Writing Skills for the Residential Appraiser 1998 • Are Your Ethics Showing 1999 • Supporting Sales Comparison Grid Adjustment for Residential Properties 1999 • The Appraisal of Local Retail Properties 1999 • Eminent Domain and Condemnation Appraising 2000 • Appraisal of Nonconforming Uses 2000 • Timber and Timberland Fundamentals 2000 • A New Beginning “2001” Arkansas Appraiser Licensing and Certification Board 2001 • Uniform Standards of Professional Appraisal Practice 2001 • Getting it Right the First Time “2002” AAL&CB 2002 • Condemnation Appraising: Basic Principals and Applications/AIREA 2003 • Condemnation Appraising: Advanced Topics and Applications/AIREA 2003 • Scope of Work – Expanding Your Range of Services/AIREA 2004 • National USPAP Update Course/AIREA 2004 • Reappraising, Readdressing, Reassigning/AIREA 2004 • Business Practices and Ethics – Course 420/AIREA 2004 • Apartment Appraisal: Concepts and Applications/Appraisal Institute, 2005 • Evaluating Residential Construction/Appraisal Institute, 2005
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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• Real Estate Finance, Value and Investment Performance/Appraisal Institute, 2005 • Uniform Appraisal Standards for Federal Land Acquisitions/Appraisal Institute, 2006 • Uniform Standards of Professional Appraisal Practice/Appraisal Institute, 2006 • Analyzing Operating Expenses/Appraisal Institute, March 6, 2008 • Forecasting Revenue/Appraisal Institute, March 7, 2008 • National Uniform Standards of Professional Appraisal Practice, Appraisal Institute, April 28, 2008 • Supporting Capitalization Rates, Appraisal Institute, May 29, 2008 • National Uniform Standards of Professional Appraisal Practice, 7-hour Update, Appraisal Institute, August 27, 2009 • Appraising Distressed Commercial Real Estate: Here We Go Again, Appraisal Institute, October 7, 2009 • Uniform Appraisal Standards for Federal Land Acquisitions Appraisal Institute, November 18 & 19, 2009 • Hotel Appraising: New Techniques for Today’s Uncertain Times, Appraisal Institute, March 23, 2010 • Valuation by Comparison – Residential Analysis & Logic, Appraisal Institute, March 31, 2010 • General Appraiser Income Approach, Part 1, Appraisal Institute, June 2010 • Appraisal Curriculum Overview, Appraisal Institute, December 15 & 16, 2010 • Analyzing Tenant Credit Risk & Commercial Lease Analysis, Appraisal Institute, June 3, 2011 • The Uniform Appraisal Dataset from Fannie Mae & Freddie Mac, Appraisal Institute, August 29, 2011 • Business Practices and Ethics, Appraisal Institute, September 20, 2011 • National Uniform Standards of Professional Appraisal Practice, 7-Hour Update, Appraisal Institute, February 7, 2012 • Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets, Appraisal Institute, March
19-20, 2012 • Arkansas Appraiser Licensing & Certification Board, Appraisals Through the Eyes of the Reviewer, May 17, 2012 • Arkansas Appraiser Licensing & Certification Board, Hot Topics in the Appraisal Industry, May 14, 2013 • 2014-2015 7-Hour National USPAP Update Course, Appraisal Institute, December 13, 2013 • Uniform Standards for Federal Land Acquisitions, Appraisal Institute March 5 & 6 2015 • Arkansas Appraiser Licensing & Certification Board, Solid Appraisals – Defensible Work Files May 14, 2015 • Appraising Rural Residential Properties – January 14, 2016 – American Society of Farm Managers and Rural Appraisers • Arkansas Appraiser Licensing and Certification Board – Appraiser Essentials May 12, 2016 • Appraising Ag Facilities: Poultry Seminar – American Society of Farm Managers and Rural Appraisers July 21, 2016
APPROVED BY THE FOLLOWING INSTITUTIONS • First Security Bank • Integrity First Bank/Mountain Home, Arkansas • Centennial Bank • Arvest Bank • Century Bank/Gainesville, Missouri • Bear State Bank • Community First National Bank • Bank of the Ozarks • Twin Lakes Community Bank, Mountain & Flippin, Arkansas • Bank of Salem, Salem, Arkansas • Bank of Thayer, West Plains and Thayer Missouri • First Service Bank – Flippin and Yellville, Arkansas • Community First Banking Company – West Plains, MO • FNBC Bank – Mountain Home & Ash Flat, AR • Citizens Bank – Batesville, AR • First Community Bank – Batesville, AR
AFFILIATIONS • Member of Northcentral Arkansas and National Board of
Realtors • Member of Multiple Listing Service/Mountain Home, Arkansas • Board Member, Arkansas Appraisal Licensing and Certification
Board; January 1, 2009 – January 1, 2015
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
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Addenda
Additional Subject Images
320 South College Street ◊ Mountain Home, AR 72653 870-425-3121 ◊ MOBILE: 870-321-3121
EMAIL: [email protected]
45
ROAD LEADING TO SUBJECT PROPERTY FRONT OF BUILDING #1
BACK OF BUILDING #1 BACK AND WEST SIDE BUILDING #1
VIEW OF RIVER FROM SUBJECT BOAT DOCK