PRICING
One cannot neglect the importance of correct pricing of any real property, even though, it is a difficult process to complete correctly. The best way is to use a professional appraiser. This profession requires an appraisal license, and a real estate “sales” licensee must not offer the service of appraisal reports. However, in order to establish a fair market value for listing purposes only, a “sales” licensee may use some appraisal techniques. Both a seller and a buyer should be aware of, that in either case, IT IS ALWAYS A MATTER OF ONE INDIVIDUAL’S OPINION. It may be helpful to the consumer to get some insight to the basics we learn in school.
There are three approaches to value:
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SALES COMPARISON APPROACH (It should be noted, that some States refers to this as the “Market Data Approach”). This approach is mainly used to estimate and indicate value for SINGLE FAMILY RESIDENCES.
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COST APPROACH. This approach is used primarily to value UNIQUE PROPERTIES.
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INCOME APPROACH. This approach is used primarily for INCOME PRODUCING PROPERTIES.
Another important factor is “HIGHEST AND BEST USE”.
In the agriculture business, of which equines are a great part, one can argue, whether or not a specific property is a “single-family residence” with a barn behind the house, or a “unique property”. To our knowledge there is no definition available to clarify this, and consequently, we have to draw our own conclusions. Are the proportions of values between the residence and the horse operation a determining factor? Is it really possible for anybody – with the assistance of a computer and no physical inspection of comparables – to properly add and deduct from “the subject”? Just in order to point out the difficulties in arriving at the “market value”, it may be of interest to learn the difference of opinions, between two professional appraisers, on the same piece of property within a time frame of 2-1/2 months.
Sales Comparison Approach -- 27.8% difference
Cost Approach -- 22.9% difference
After looking at a substantial number of equine operations – both small and large – across America, I have not found one comparable to another. Consequently, we believe that all equine facilities are “UNIQUE” and should be treated accordingly. Granted some more than others, but it requires a physical inspection, dealing only with facts, rather than assumptions and computers.
After having had the opportunity to look and compare professional appraisers opinion in three states – South Carolina, Virginia and Texas – it is quite interesting to see the different approaches. It is too involved to relate on this website, but we will be happy to share this with anybody interested.
In conclusion, THE ONLY IMPORTANT FACTOR TO BOTH SELLER AND BUYER IS TO GET AS CLOSE AS POSSIBLE TO THE MARKET PRICE (which is the actual selling price) RATHER THAN THE MARKET VALUE (which is somebody’s opinion).
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