Each comparison property
was zoned single-family residential and was in average condition.
Statistics show that over the past decade rural land prices have risen by 168%, while by comparison property
in London rose on average by 113% and outside of the capital by less than 100%, which puts into perspective the value in investment terms of land ownership.
The homes more accurate value was $540,000 and was reflected in the one lower comparison property
that, wouldn't you know it, happened to be the closest," Ogden said.
0 million, in comparison property
operating revenues were $285.
Bar D represents the reproduction cost indicator of market value of a substitute comparison property with equivalent utility and desirability as if the subject property was already cured.
The fact that a substitute comparison property operates more efficiently does not in and of itself equate to the existence of functional obsolescence.
One suggested definition of functional obsolescence is a loss in market value of a subject property that may occur when there is a reasonable feasibility of a typical prospective purchaser acquiring, without undue delay; a substitute comparison property possessing an equivalent utility but which is more cost-effective in terms of design, materials, or equipment.
This four-step method assumption fails to reflect the fact that the cost of the new replacement item is an additional cost, not contained in the reproduction cost of the subject property, but which would be contained in the cost of the substitute comparison property.
2] Thus, the Principle of Substitution makes clear that the substitute or comparison property contemplated by a hypothetical buyer that features design, materials, and equipment of desirability and utility equivalent to the subject property.
The significance of correctly applying this principle to both types of cost indicators is that the final costs in both cost indicators must reflect the costs of the same comparison property.
Using a replacement cost approach, the development of costs for the comparison property are uncontroversial and straightforward.
These costs reflect a new comparison property which, while possessing the equivalent utility, will not be a duplicate or replica of the subject property if more cost-effective equipment, materials, or design are available on the valuation date.