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COST APPROACH <br />Due to the subjectivity in physical and external depreciation, the Cost Approach is not considered a <br />reliable indicator of value and therefore was not applied. <br />SALES COMPARISON APPROACH <br />The Sales Comparison Approach to Value is predicated upon sales of properties with similar <br />characteristics as the subject. The primary premise of this approach is that the market value of the <br />subject is directly related to the prices of competing properties after adjustment. Adjustments are <br />made in an effort to account for significant differences. <br />Supply and Demand: Sales in the market result from negotiations between buyers, sellers and <br />lenders. Buyers reflect market demand and sellers supply. If demand is high, prices tend to increase, <br />if it is low, prices usually decrease. <br />Substitution: The principle of substitution holds that the value of a property tends to be set by the <br />price paid to acquire a substitute property of similar utility and desirability within a reasonable amount <br />of time (The Appraisal of Real Estate, 14th Edition). The Sales Comparison Approach is less reliable <br />if substitute properties are not available in the market. There are adequate sales to apply the sales <br />comparison approach and formulate a reliable indication of market value. <br />Balance: The market tends to force a balance between supply and demand. Balance can change <br />due to shifts in population, variations in purchasing power, consumer tastes and preference and time. <br />Externalities: When possible, select comparables with similar location, economic conditions and <br />support facilities. <br />The Following Outline Is Used In The Sales Comparison Approach: <br />- A location map of the comparable sales. <br />- Comparable sales are listed. <br />- An adjustment grid using the comparable sales. <br />- A discussion of adjustment and conclusion of value. <br />Nagel) Appraisal Incorporated 1952.544.8966 <br />