View
54
Download
0
Category
Tags:
Preview:
DESCRIPTION
Appraisal Review Challenges: Reviewing Outside Major MSAs and Reviewing Another Institution’s Report. Presenters Stephen S Wagner, MAI, SRA, AI-GRS Chief Appraisal Officer, VP Old National Bank Indianapolis, IN 765-427-5414 M. Ralph Griffin, MAI, AI-GRS Marion R. Griffin & Co., Inc . - PowerPoint PPT Presentation
Citation preview
Appraisal Review Challenges: Reviewing Outside Major MSAs and Reviewing Another Institution’s Report
PresentersStephen S Wagner, MAI, SRA, AI-GRSChief Appraisal Officer, VPOld National BankIndianapolis, IN765-427-5414
M. Ralph Griffin, MAI, AI-GRSMarion R. Griffin & Co., Inc.Spartanburg, SC
Slide 2
Definitions
Primary Metropolitan Statistical Area (PMSA) An area of more than one million people that consists of a large,
urbanized county or a cluster of counties with very strong internal
economic and social links; designated under standards established in
1980 by the Federal Committee of MSAs.
Metropolitan and Micropolitan Statistical Areas The general concept of a metropolitan or micropolitan statistical area
is that of a core area containing a substantial population
nucleus, together with adjacent communities having a high
degree of economic and social integration with that core.
Rural Not urban or suburban
Slide 3
Definitions Continued
Each metropolitan statistical area must have at least one urbanized area of 50,000 or more inhabitants.
Each micropolitan statistical area must have at least one urban cluster of at least 10,000 but less than 50,000 population
Metropolitan Area
Micropolitan Area
CBSA Code CBSA TitleMetropolitan/Micropolitan Statistical Area Principal City Name
FIPS State Code
FIPS Place Code
21780 Evansville, IN-KY Metropolitan Statistical Area Evansville 18 22000
CBSA Code CBSA TitleMetropolitan/Micropolitan Statistical Area Principal City Name
FIPS State Code
FIPS Place Code
27540 Jasper, IN Micropolitan Statistical Area Jasper 18 37782
Slide 4
Example-Metropolitan
Evansville -120,235 (2012)
Evansville is the commercial, medical and cultural hub of Southwestern Indiana and the Illinois-Indiana-Kentucky tri-state area. It is the third-largest city in the state of Indiana and the largest city in Southern Indiana.
Slide 5
Example-Micropolitan
Jasper -15,157 (2012)
Jasper is a city in Dubois County, Indiana, United States. The population was 15,038 at the 2010 census. The city has been the county seat of Dubois County since 1830, succeeding Portersville.
Slide 6
Geographical Perspective
Jasper to Evansville is about a 45 to 60 minute drive.
Slide 7
Low Density/Rural Markets
Discussion Buyer/seller motivations Level of sophistication
• Income producing properties• Owner Occupied
Demand Drivers• Population• Income• Employment
Data Available• MLS• Informal Data Banks
Slide 8
Residential Low Density Markets
So what’ll we do with this thing in NoWhere Indiana?
Slide 9
Residential Low Density Markets
Slide 10
Residential Low DensityResidential Low Density Markets
Slide 11
Residential Low DensityResidential Low Density Markets
Slide 12
Residential Low DensityResidential Low Density Markets
Slide 13
Residential Low Density
DOM 573;The Subject was listed for sale for $3,950,000 on 09/13/2011 and was lowered to it's current list price of $3,500,000 on 07/31/2012.
With a loan of $2,000,000 to $2,400,000 ADS would be $128,000 to $155,000 At a 28% debt to income level it requires
an annual income of $460,000 to $555,000
Residential Low Density Markets
Slide 14
Residential Low Density
Only 2.5% of the subject county population has an income above $200,000 per year.
Land to Value Ratios for higher end properties in the subject area are 15 to 20% at best. The subject waterfront site is estimated to be $400,000. That would indicate that the overall value could be as follows:
$400,00015.00%
$400,00020.00%
$2,666,667
$2,000,000
Residential Low Density Markets
Slide 15
Residential Low Density
Buyers will most likely have to come from a larger Metropolitan or Micropolitan area.
Have to get comparables on a regional basis.
Examine other sales to estimate and determine functional obsolescence.
Residential Low Density Markets
Slide 16
Commercial Low Density Markets
So what’ll we do with this, in SomeWhere Indiana? Is that a Strip Center?
Slide 17
Commercial Low Density
Out of 4 sales, the report showed one cap rate and a Band of Investment
Little in the way of expense comps, but did have subject alleged past performance
As a Reviewer, is there more you can or should do?
Commercial Low Density Markets
Slide 18
Commercial Low Density
So what’ll we do with this, in WhoKnowsWhere?
Commercial Low Density Markets
The Cost Approach is not your friend!
Slide 19
Commercial Low Density Markets
Slide 20
Commercial Low Density
House of Worship Town of 3,000
What the report said– Most Likely Purchaser-The subject is a church
facility. Given the specialized nature of these buildings, conversion of these properties to an alternate use is typically unlikely but possible.
Commercial Low Density Markets
Slide 21
Commercial Low Density
– Therefore, given the physical characteristics of the subject, the most likely purchaser would be another growing congregation or possibly a public use such as a daycare facility considering the gymnasium and overall site improvements.
How many congregations are looking for a church in a town of 3,000?
Have to consider alternative use. Most likely-significant functional obsolescence
Commercial Low Density Markets
Slide 22
Commercial Low DensityFirst 3 sales sold as churches, Comparable 4 sold as a daycare. All comps in major metro. Reconciled to $41/SF.
Commercial Low Density Markets
Slide 23
How to do you calculate the Functional Obsoleence and whaere are th
comparables?
Slide 24
The End
Thank You
Recommended