REAL ESTATE APPRAISAL FILE #13104 - University … Estate Appraisal_May...The subject property of...

REAL ESTATE APPRAISAL

FILE #13104 Update to File#12237

Project # UM 12-103.3

University of Montana Residential Real Estate

1519 Woodland Avenue

Kalispell, MT 59901

PREPARED FOR:

University of Montana Facilities Services

c/o Hugh Jesse

32 Campus Drive #9360

Missoula, MT, 59812-9360

1519 Woodland Avenue, Kalispell, MT

May 10, 2013

~ Frazier Appraisal Services, Inc. ~ 2

May 14, 2013

University of Montana Facilities Services

c/o Hugh Jesse

32 Campus Drive #9360

Missoula, MT, 59812-9360

RE: Project # UM 12-103.3

Dear Mr. Jesse,

In accordance with your request dated April 29, 2013, I have personally viewed and prepared an

appraisal valuation report of the real property identified as:


Kalispell, MT 59901

The valuation assignment is to provide an update to a previous assignment. I referenced USPAP

2012-2013 for clarification. The appropriate term for this assignment is an “Update,” which reflects a

current market analysis. “The term “Update” is often used by clients when they are seeking a current

appraisal of a property that was the subject of a previous assignment.” [USPAP 2012-2013, AO3, page A-

7]. The reporting requirements are met via the attached summary report and incorporate by reference the

original appraisal #12237 dated October 17, 2012, which my client has on file. The report presents a

summary of my analysis and states the integral facts, reasoning and conclusions regarding the appraisal

process to develop an opinion of market value as defined herein. I am responsible for all the conclusions

set forth in the report.

The function and intended use of the appraisal is to provide my client, Mr. Hugh Jesse, with a

current opinion of market value of the real estate for asset valuation. The valuation assignment,

development and report are in compliance with the Uniform Standards of Professional Appraisal Practice

[USPAP 2012-2013]. The effective date of appraisal is May 10, 2013, the date of viewing and

photographs. I have provided appraisal services regarding the subject real estate within the three year

period of the effective date of the appraisal.

The opinion of value is subject to the attached assumptions and limiting conditions contained in

the appraisal report. The as-is market value is based upon a marketing time of one year and an exposure

time of one year. Based upon the assumptions and limiting conditions presented in this report I have

formed an opinion of the as-is market value of the subject property in fee simple estate as of the effective

date of the appraisal remains at:

AS-IS FAIR MARKET VALUE: $90,000

It has been a pleasure to assist you. If I may be of further service to you in the future, please let

me know.

Best Regards,

William R. Frazier

REA-RAG-LIC-401

MT Certified General Appraiser


TABLE OF CONTENTS

COVER .................................................................................................................................................. 1

TRANSMITTAL LETTER .................................................................................................................... 2

TABLE OF CONTENTS ....................................................................................................................... 3

REPORTING REQUIREMENTS ......................................................................................................... 4

CERTIFICATION ................................................................................................................................. 5

EXECUTIVE SUMMARY .................................................................................................................... 6

SCOPE OF WORK ................................................................................................................................ 7

IDENTIFICATION OF THE PROPERTY ........................................................................................... 8

STATEMENT OF OWNERSHIP ......................................................................................................... 8

DEFINITION OF FAIR MARKET VALUE ........................................................................................ 9

MARKETING & EXPOSURE TIME ................................................................................................... 9

DESCRIPTION OF THE PROPERTY ................................................................................................. 9

MARKET DATA SUMMARY ........................................................................................................... 10

VALUATION ...................................................................................................................................... 12

CONCLUSION TO SALES COMPARISON ANALYSIS ................................................................ 17

STATEMENT OF LIMITING CONDITIONS ................................................................................... 21

PRIVACY NOTICE ............................................................................................................................ 22


REPORTING REQUIREMENTS

The following is required reporting for all real estate appraisals:

1. Clients and Intended Users: Mr. Hugh Jesse as a representative of the University of Montana

Facilities Services ordered the appraisal update and is thus my client. Mr. Jesse and un-named

representatives of the University of Montana are the intended users of the appraisal. No other

intended users are noted by the client or appraiser.

2. Intended Use of the Appraisal: The intended use of this appraisal is to provide my client with a

current opinion of the current market value of the identified real estate for asset valuation.

3. Identification of the Real Property: See Report: Attached Maps and Photographs


Kalispell, MT 59901

4. Real Property Interest Appraised: Fee Simple Title

5. Purpose of the Appraisal: The function and purpose of the appraisal is to develop an opinion of the

“as-is” fair market value as defined by the Federal Treasury Regulation.

6. The effective date of the appraisal: The date of viewing, the effective date of the valuation, is May

10, 2013. Reporting date is May 14, 2013.

7. Scope of Work: See attached report.

8. State assumptions and limiting conditions: See attached addenda.

9. Summarize the information analyzed, the appraisal procedures followed and the reasoning that

support the analyses, opinions and conclusions: See attached

10. State the use of the real estate existing as of the date of value, and the use of the real estate

reflected in the appraisal; and when the purpose of the assignment is market value, summarize

the support and rationale for the appraiser’s opinion of the highest and best use of the real

estate: Current use, highest and best use and use reflected in the appraisal are as-is, single family

residential on a larger than typical site.

11. Personal property, trade fixtures and equipment. The appraisal assignment is to provide an

opinion of the market value of the real estate only. All sales and the subject property include personal

property, fixtures or equipment typical to the function of a single family residence as in appliances,

HVAC, etc.

12. Include a signed certification: See following


CERTIFICATION

I certify that, to the best of my knowledge and belief:

the statements of fact contained in this report are true and correct.

the reported 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.

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.

I have performed services as an appraiser regarding the property that is the subject of this

report within the three-year period immediately preceding acceptance of this assignment as

known to my client prior to accepting the assignment.

I have no bias with respect to the property that is the subject of this report or to the parties

involved with this assignment.

my engagement in this assignment was not contingent upon developing or reporting

predetermined results.

my compensation for completing this assignment is not contingent upon the development

or reporting of a predetermined value or direction in value that favors the cause of the

client, the amount of the value opinion, the attainment of a stipulated result, or the

occurrence of a subsequent event directly related to the intended use of this appraisal.

my analyses, opinions, and conclusions were developed, and this report has been prepared,

in conformity with the Uniform Standards of Professional Appraisal Practice.

I have made a personal viewing of the property that is the subject of this report.

no one provided significant real property appraisal assistance to the person signing this

certification.

William R. Frazier, MT Certified General Appraiser #401, have personally prepared all

conclusions and opinions about the real estate that were set forth in the appraisal report. I

have not authorized anyone to make a change to any item in the report; therefore, if an

unauthorized change is made to the appraisal report, I will take no responsibility for it.

May 10, 2013

William R. Frazier

REA-RAG-LIC-401

MT Certified General Appraiser


File #13104: Update to File #12237

EXECUTIVE SUMMARY

Property Address: 1519 Woodland Avenue

Kalispell, MT 59901

Legal Description: Tract 1 of Certificate of Survey #19324 located in NE1/4 SE1/4

Section 17, Township 28 N, Range 21 W, P.M., M., Flathead

County, MT

Property Description: Flathead Assessor Tract 6D Flathead County, Montana

Client: University of Montana Facilities Services, Mr. Hugh Jesse

Recorded Owner: University of Montana

Intended User: Representatives of the University of Montana

Intended Use: Asset Valuation

Property Interest: Fee Simple Title

Assessor Number: 0065000

RE Taxes: 2012 $80.73 [note change: Exemptions]

Census Tract Number: 30-029-12

Site Data: 0.79 Acre per Survey

Flood Map: 30029C1820G & 1810G Zone X & AE [slough] 9/28/2007

Improvements: Single family residence: c. 1930, one level, 1,254 sq ft [+/-]

above grade, 698 sf detached garage [2-cars], 199 sf “shop,”

wood deck, patio, well, septic, etc.

Current Use: Residential

Highest and Best Use: As-Is

Zoning: R-2 [Flathead County: One Family Limited Residential]

Effective Date: May 10, 2013 [Viewing Date]

MARKET VALUE CONCLUSION:

$90,000


SCOPE OF WORK

For each appraisal or consulting assignment, the appraiser must;

1) Identify the problem to be solved. The appraisal problem, as discussed with my client, is to

provide a current opinion of the market value of the real estate identified herein for asset

valuation as an update to a previous assignment.

2) Determine and perform the work necessary to develop a credible result. The scope of work is

to recognize the specific conditions set forth in the definition of market value. These

“conditions” require a specific knowledge of the subject property, knowledge of the real estate

market and marketing area, an understanding of market behavior, conditions of sales and the

subject’s history, contracts and other sales history that can be reconciled to the general market

conditions. The appraisal considers socio-economic conditions as they affect the property

appraised. This encompasses the national, regional, local and all other external factors that

affect the subject real property. A physical inspection of the property, neighborhood and local

area is made as a basis for the analysis and application of the three recognized approaches to

real property valuation; Sales Comparison Approach [SCA or Market], Cost and Income. In

arriving at a value estimate, the appraiser reviews all approaches to value and applies those

approaches that are applicable to the assignment. In this appraisal, sales comparison

methodology is the most applicable for providing a market value estimate for a single

family residential property. Income analysis is considered but not used in the valuation

process because the subject and comparable properties are typically owner occupied and rarely

purchased in the open market for income investment. Cost analysis is considered but not used

because the subject improvements are over 5-years of age, and depreciation in all forms can be

difficult to measure and present unreliable estimates than can impact the value conclusion.

3) Disclose the scope of work in the report. Preparation of this assignment included:

viewing the subject properties;

a viewing of comparable sales and the “neighborhood” defined as residential properties

with similar market characteristics and appeal to the subject property;

gathering, confirming and analyzing land sales, improved sales, MLS reports and

courthouse records, applicable to the subject property;

applying the sales comparison approach as the appropriate valuation methodology to arrive

at an indication of value for the subject real estate.

The following sources were contacted regarding information utilized in the process:

Source Information

NMAR / MLS Market Sales Data

Local Brokers/Agents Market Sales Data

Property owners, buyers, sellers Market Sales Data

In House appraisal files Market Data

Flathead County Clerk Subject & comparable data

Flathead County Assessor Tax Records

To develop the opinion of value, I performed the real estate appraisal process, as defined in

USPAP 2012-2013. This document is categorized as a Summary Report.


IDENTIFICATION OF THE PROPERTY

The subject property of this appraisal assignment is located at 1519 Woodland Avenue, Kalispell,

MT.

Flathead Assessor Tract 6D

Certificate of Survey #19324

STATEMENT OF OWNERSHIP

According to Flathead County Courthouse records, the subject property has recorded ownership to

the University of Montana via a Deed of Distribution; Doc#201000020465 recorded September 7, 2010.

A boundary line adjustment to the site was surveyed, recorded and transferred to the U. of MT via Quit

Claim Deed, Doc#201200011847 recorded May 31, 2012.

SUBJECT

SUBJECT


DEFINITION OF FAIR MARKET VALUE

According to Treasury Regulations section 20.2031-1(b), and as restated in Revenue Ruling 50-

60, fair market value is—“the amount at which the property would change hands between a willing buyer

and a willing seller when the former is not under compulsion to buy and the latter is not under any

compulsion to sell, both parties having reasonable knowledge of the relevant facts.”

"A term that is, in concept, similar to market value in general usage; used mainly in condemnation,

litigation, income tax and property tax situations. When an appraisal assignment involves developing an

opinion of fair market value, the appropriate, requisite, and precise definition of the term depends on the

use of the appraisal and the applicable jurisdiction.”

MARKETING & EXPOSURE TIME

Sales comparison analysis data is utilized to estimate marketing and exposure time. Marketing

time is assumed to be the expected listing period prior to the closing of a sale and is viewed from an

historical perspective. The “exposure” period is related to the appraisal value conclusion and reflects the

estimated period of time on the market to produce the sale at that price. The value conclusion assumes a

“reasonable” marketing period for the subject property, which is estimated at one year. The appraisal

analysis and value indication assume a similar exposure period. While sales data shows marketing

periods can extend beyond a “reasonable” time frame, value conclusions are reconciled to a one year

period.

DESCRIPTION OF THE PROPERTY

***My May 10, 2013 viewing was from the exterior only. The property appears to be in

similar condition to my previous viewing.

The subject site is non-typical as it includes a small level building site fronting Woodland Avenue,

approximately 104’ x 82’ to the top of a steep bank. The remainder of the site falls to a wooded creek or

drainage bottom. There is a well on this portion of the site. As the site progresses to the east, above the

slough bottom, it rises to an area that includes a 20’ pedestrian/bike path easement. The site is irregular in

shape and terrain. The site is adjacent to but not within the Kalispell City Limits. It appears the only

reasonable building site is the level portion along the road due to flood zone and easement.

According to the Department of Revenue [DOR], the subject residence was originally constructed

in 1930. The residence appears to be wood frame, on a concrete perimeter foundation. I did not view the

crawl space. The residence is one-level and appears to have additions to the original structure. The

building exterior has a metal roof surface over wood frame and roof structure. The siding surface is vinyl

lap siding. Windows are a mixture of aluminum and vinyl clad. The building has an “air-lock” front

entry with an additional entry to the north “bedroom.” There is a small, 5’ x 18’ exterior wood deck at the

rear in addition to a block patio riding along the edge of the drop off. Heating is by a gas forced air

furnace with no air conditioning. Domestic water appears to be via a shared, private well and domestic

sewage is via a private septic system. City services [water/sewer] are located along the roadway but

would require annexation into the Kalispell City. A gravel driveway provides entry to the detached

garage along the road. There is fencing around the front yard. There is a small, 12 x 16 “shop” area

attached at the west elevation with an exterior entry and an entry from the south bedroom.

The interior is noted by obsolescence in ceiling height, which is 81” [6’9”] with some vaulted

areas providing less clearance. Room layout and overall design also have features of obsolescence. The

floor plan consists of two bedrooms, living room, kitchen and dining area and one full bath. There is

carpet, vinyl and laminate flooring, drywall and wood paneling. There is a storage area east of the north

bedroom. Overall quality rating of the improvements is average for its age.


MARKET DATA SUMMARY

A summary of Kalispell Area market data follows.

2005 total sales @ $211,722,666

2006 total sales @ $217,239,175

2007 total sales @ $170,743,178

2008 total sales @ $125,317,855

2009 total sales @ $102,899,656

2010 total sales @ $112,794,753

2011 total sales @ $96,014,616

2012 total sales @ $129,344,974

Kalispell area residential sales volume increased in 2012 over 2011 by approximately 35%. The

number of transactions increased by 26% [YOY]. MLS reports 186 REO [Bank Owned] sales reflecting

29% of the Kalispell residential market, similar to the last few years. MLS reports 27 active listings out

of 546 active listings or approximately 5%, suggesting this segment of the local market is rapidly

declining.

The next data set illustrates residential sales and listing by price, again, illustrating that the

segment of the local market with the greatest number of sales is quickly running out of inventory.


In calendar year 2012 there were 411 reported sales in the Kalispell marketing area less than

$200,000 which is considered by many to be “affordable” housing. There are currently 205 active listings

in this price range or less than one-half the inventory available for sale.

The next data set subdivides the local Kalispell real estate market by market category to compare

trends year-over-year [YOY].

2011 2012

Residential: 510 Units @ $96,014,616 Residential: 643 Units @ $129,344,974

Land: 42 units @ $7,075,500 Land: 105 units @ $10,938,234

Commercial/Ind: 18 units @ $7,119,900 Commercial/Ind: 27 units @ $13,602,500

Multi-family: 16 units @ $3,501,986 Multi-family: 14 units @ $3,389,810

Agriculture: 0 units Agriculture: 0 units

Business Op: 1 unit @ $33,000 Business Op: 3 unit @ $122,500

The local real estate market is clearly improving based on the illustrations above. Only the

“Multi-family” segment of the market shows a small decline YOY. All other segments of the Kalispell

real estate market show increases. The next data set illustrates absorption estimates based on sales and

active listings per market segment.

Property # Sales Listings Years of

# Sales Listings Years of

Category 2011 1/1/2012 Supply

2012 5/14/2013 Supply

Residential 503 531 1.1

643 545 0.8

Land 42 608 14.5

105 593 5.6

Commercial 18 101 5.6

27 96 3.6

Multi-Family 16 28 1.8

14 52 3.7

The residential market is heading for a “healthy” supply demand relationship, typically noted as a

6-month inventory in relation to historic sales. All other segments of the market continue with an over-

supply of current inventory. Vacant land continues to be a segment of the local market that is clearly

troubled due to the over-supply of inventory for sale, which continues to put pressure on pricing in the

market.

The subject property value should reasonably benefit from the reduction in inventory at the lower-

end of the Kalispell market. While this may not reflect a dramatic price increase over time, it may reduce

the marketing time required to produce a sale, particularly while interest rates remain low and there is

financing available.


VALUATION

The subject property’s market value has been determined according to residential guidelines of

highest and best use as of the effective date of the appraisal. All the value conclusions herein reconcile

price with a marketing and/or exposure period of approximately one year based on market sales. Sales

comparison analysis or the “Market Approach” to value is the primary methodology utilized to estimate

the market value of residential oriented properties.

The Northwest Montana Association of Realtors MLS is the primary source of sales data. Sales

are verified by market participants when possible. Other sources of data are the Montana Department of

Revenue, physical viewing and inspection of the sales and local appraisers and my existing appraisal files.

A summary of my analysis follows.

Sales Comparison or Market analysis is the most commonly accepted valuation methodology for

single family residential properties. NMAR/MLS is the primary source of market sales. MLS reports 92

residential sales in Kalispell [twice the number from the previous appraisal] from Jan 1, 2013 through

May 10, 2013 with search parameters as single family residences less than 2,000 sq ft, sites less than 1-

acre. The average site area is 0.29-acre vs. 0.27, previous. The sale price range is $40,000 [vs. $18,000]

[low] to $316,000 [vs. $239,000] [high]. The average sale price is $155,000 [vs. $113,902] and the

median sale price is $159,460 [vs. $128,500]. The average residence [GLA] is 1,357 sq ft [v. 1,197 sq ft].

The average unit price is $116.26/sf [vs. $93.73/sf]. Twenty (20) of the 92 sales are reported as Bank

Owned or REO sales, which equates to 22% [vs. 33% in previous]. The average days on market for the

92 sales is reported at 178 days; however, this statistic is not weighted and requires further research as

listings are commonly contracted every 6-months.

I researched and gathered information on the following residential sales within the Kalispell

marketing area. Sales are chosen first by location and followed by specific characteristics to produce

recent sales that appear to bracket the subject in primary components of value. A summary of the

adjustment process follows. In sales comparison analysis, the comparable sales are selected and adjusted

to the subject. Inherent to the sales comparison analysis is to attempt to “bracket” the subject property

with sales that have superior characteristics and inferior characteristics. While none of the sales have sites

as large as the subject; all the sales herein have significant site valuations due to locational amenities.

Those factors inferior to the subject require a positive numeric adjustment while those factors superior to

the subject require a negative numeric adjustment.

A summary of my analysis follows.

COMPARABLE SALES SUMMARY

Date Sale Price Kalispell Location Lot Size GLA $/SF

Sale #1 12/21/2012 $70,000 4 Woodland Avenue 0.24 1,920 $36.46

Sale #2 1/17/2013 $130,000 238 Caroline Drive 0.6 1,408 $92.33

Sale #3 4/15/2013 $103,750 577 Maple Drive 0.7 1,058 $98.06

Listing#4 Active $129,900 143 S. Cedar 0.28 1,056 $123.01

*GLA is residential building area above grade.


COMPARABLE SALE #1

4 Woodland Avenue, Kalispell, MT

Comparable Sale #1 was used in the previous appraisal as “Active Listing #4.” It is included as an

inferior property in the neighborhood but with similarities in functional utility, primarily due to overall

age and condition. The property is listed via MLS#315722 for $98,500 and sold via a cash transaction

after only 88 days on market. I included this listing as an inferior property within the subject’s

neighborhood.

Description Adjustment[+/-]

ITEM SUBJECT COMP #1

Address 1519 Woodland Ave 4 Woodland Avenue

Kalispell, MT Kalispell, MT

Sale Price N/A $70,000

$/GLA [Above Ground] N/A $36.46

Sales/Financing N/A Cash

Concessions N/A None noted

Date of Sale Appraisal Date 10/15/12 12/21/2012

Location SE Kalispell SE Kalispell

Leasehold/Fee Simple Fee Simple Fee Simple

Site 0.79-ac 0.24-acre

View Residential / Woods Residential

Design & Appeal Ranch 2-Story

Quality of Construction Average for age Average

Age [Effective Age] 1930 [Eff 60 yrs] 1898 [Eff 70] $6,000

Condition Average for age Inferior / 15% $10,500

Room Count 5/2/1 8/4/2

Gross Living Area 1,254 1,920 ($26,640)

Basement & Finish None None

Rooms Below Grade Crawl Space None

Functional Utility Fair: Ceiling Ht, Layout Fair / Age / Condition

Heating / Cooling GFA / None GFA / None

Garage/Carport 2-Car detached None $15,000

Porch / Patio, Deck Deck, Patio Small Deck

Fireplace/etc. 1-FP None

Other Improvements Fence, Shop Old Shed $5,000

Net Adjustments[total] $9,860

Value Indication to Subject $79,860


COMPARABLE SALE #2

238 Caroline Drive, Kalispell, MT

Sale #2 listed via MLS#308538 for $169,000 and was subsequently reduced to $134,000 prior to

selling as a reported “short sale” after 699 days on market. This residence was constructed in 2006 and is

included as a superior property in direct competition with the subject.



Address 1519 Woodland Ave 238 Caroline Drive




Sales/Financing N/A Cash

Concessions N/A None noted




Site 0.79-ac 0.6-ac

View Residential / Woods Residential

Design & Appeal Ranch Ranch

Quality of Construction Average for age Average +

Age [Effective Age] 1930 [Eff 60 yrs] 2006 [Eff 5] ($30,000)

Condition Average for age Average +


Gross Living Area 1,254 1,408 ($6,160)


Rooms Below Grade Crawl Space Crawl Space

Functional Utility Fair: Ceiling Ht, Layout Average ($13,000)

Heating / Cooling GFA / None GFA/ None

Garage/Carport 2-Car detached 2-Car+ detached ($2,500)

Porch / Patio, Deck Deck, Patio Deck


Other Improvements Fence, Shop None $5,000

Net Adjustments[total] ($46,660)



COMPARABLE SALE #3

577 Maple Drive, Kalispell, MT

Sale #3 is a recent sale of an older residence situated on a larger than typical site. The property

listed as an REO via MLS#317180 at $107,900 and sold after only 77 days on market. This sale is

another property that appears to be within the subject’s market appeal.



Address 1519 Woodland Ave 577 Maple Drive




Sales/Financing N/A REO / Conventional $20,750

Concessions N/A Closing Costs [Typical]




Site 0.79-ac 0.7-ac ($10,000)

View Residential / Woods Residential / Woods

Design & Appeal Ranch Ranch



Condition Average for age Average


Gross Living Area 1,254 1,058 $7,840


Rooms Below Grade Crawl Space Crawl Space

Functional Utility Fair: Ceiling Ht, Layout Average ($10,375)


Garage/Carport 2-Car detached 2-Car detached

Porch / Patio, Deck Deck, Patio Deck, Patio


Other Improvements Fence, Shop Fence $5,000

Net Adjustments[total] ($9,785)



COMPARABLE LISTING #4

Active listing #4 is included as a comparable property of an older residence with some features

similar to the subject in market appeal. This is another REO that has some of the functional issues like

the subject. For example, the upper level rooms have limited ceiling height. The property is listed via

MLS#317999 and has been on the market for 250 days. The residence has a partially finished basement.



Address 1519 Woodland Ave 143 S. Cedar Drive




Sales/Financing N/A Active Listing/REO See Comment

Concessions N/A Active Listing

Date of Sale Appraisal Date 10/15/12 Active Listing See Comment



Site 0.79-ac 0.28-ac [see comment]

View Residential / Woods Residential, Woods

Design & Appeal Ranch 1.5-Story



Condition Average for age Average


Gross Living Area 1,254 1,056 $7,920

Basement & Finish None 760' 70% ($15,200)

Rooms Below Grade Crawl Space 4/0/0

Functional Utility Fair: Ceiling Ht, Layout Average (-12,990)


Garage/Carport 2-Car detached Average

Porch / Patio, Deck Deck, Patio 1-Car Detached $10,000

Fireplace/etc. 1-FP Deck, Cov Porch

Other Improvements Fence, Shop Fence $5,000

Net Adjustments[total] (-34,270)



COMMENTS ON ADJUSTMENTS

All the comparable sales were transferred in fee simple title. Sale #3 is adjusted upwards by 20%

of sale price to reflect the REO status of the sale based on broader sales analysis within the marketing

area. Active Listing #4 is an REO but I did not adjust because the REO and “active” status of the

property appears to balance out. That is to say I would expect a 20% discount off the list price [negative

adjustment], which is the same as the 20% positive adjustment for the REO condition; thus no adjustment

is made.

Site: Extraction and sales analysis are utilized to make site valuation adjustments. Sale #3 has a

similar site size but a negative adjustment as the entire site is level and functional, thus superior to the

subject. No other site adjustments appear to be appropriate.

Gross Living Area [above grade]: The GLA adjustment is applied at $40/sf to the difference in

above grade building area between the comparable sale and the subject. The dollar amount [$40/sf] is the

approximate average of the extracted unit price to the above grade gross living area of the comparables.

Basements [below grade building area]: There are two primary factors in basement areas; the

gross area and the amount of finished space [partitions, interior finish, fire access and overall functional

utility of the space]. The adjustment reflects the difference in the contributory value of this building area

to the subject. The adjustment ranges are approximately $20/sf.

Effective Age of the Improvements: Extraction methodology is utilized to estimate the effective

age differences between the comparable sales and the subject applied at a rate of 1% per year between the

effective age estimates times the extracted contributory value of the improvements. Effective age or

economic age reflects the effects of depreciation on improvements, which are typically, reduced due to

high-quality, maintenance, and in Sale #3 a major renovation.

Condition / Quality of Construction: Sale #1 appears to require a “condition” adjustment due to

overall age and the condition of this older residence at the time of sale.

Functional Utility: Functional utility is the ability of a property to function in the marketplace.

The subject has [negative] functional issues due to low ceiling height, general room layout and to some

extent the steep slope at the rear of the building, which could be considered a “safety” factor. Sale #1 is

included as the most similar example of a building with “functional” issues. The other three comparables

are considered superior in this regard and are adjusted downward by 10% of sale price.

Other Adjustments: The other consideration in the analysis is to estimate the differences in the

secondary improvements that the subject and comparable sales have, like the subject’s fencing and shop

area.

CONCLUSION TO SALES COMPARISON ANALYSIS

Overall market conditions are showing improvement and properties in direct competition with the

subject at the low-end of the overall price range are dramatically reducing inventory. I attempted to

bracket the subject property with properties that have both superior and inferior components of value in

order to present a reasonable opinion of the market value of the subject property as of the effective date of

the appraisal, May 10, 2013. When the three selected comparable sales and listing are adjusted to the

subject, the range in market value indications to the subject property is from $80,860 [Sale #1] to $95,630

[Listing #4]. In my analysis, I found that while the site is larger than typical, most of the excess land is

“open space” without significant impact to the overall value. Secondly, the subject’s low ceiling height

may restrict the marketability of the improvements. The subject “competes” with relatively typical

residences of varying age and quality, noting locations differ from the subject. There are currently no

listings or sales in the immediate neighborhood. Therefore, when these factors are considered, my final

market value conclusion for the subject real estate is reconciled at $90,000 as of the effective date with

consideration of the enclosed Assumptions and Limiting Conditions, weighting all four properties in the

analysis.


COMPARABLE SALES LOCATION MAP


Flood Map

30029C1810

Flood Map

30029C2280G


Subject Site

Illustration of Flood Area in blue, City Limits in pink

According to Tom Jenz, Kalispell City Planner, there are Kalispell Water and Sewer services

along Woodland Avenue that are available to the parcels, including the subject parcels, upon annexation

into the City. That said, the subject residence at 1519 Woodland Avenue, highlighted in yellow above, is

not within the City and utilizes private water well and septic system for domestic water and sewage. The

shaded areas in “pink” above reflect the Kalispell City Limits. The shaded areas in “blue” reflect those

sites within a 100-year flood zone. The residence is constructed above and out of the flood zone area.

SUBJECT


STATEMENT OF LIMITING CONDITIONS

The appraiser's certification that appears in the appraisal report is subject to the following conditions:

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being

appraised or the title to it. The appraiser assumes that the title is good and marketable and, therefore, will not

render any opinions about the title. The property is appraised on the basis of it being under responsible

ownership.

2. The appraiser has provided a plat map in the appraisal report to show approximate dimensions of the site

and is included only to assist the reader of the report in visualizing the property and understanding the

appraiser's determination of its size.

3. The appraiser has provided a sketch in the appraisal report to show approximate dimensions of the proposed

improvements and the sketch is included only to assist the reader of the report in visualizing the property and

understanding the appraiser's determination of its size.

4. The appraiser has examined the available flood maps that are provided by the Federal Emergency

Management Agency (or other data sources) and has noted in the appraisal report whether the subject site is

located in an identified Special Flood Hazard Area. Because the appraiser is not a surveyor, he or she makes

no guarantees, express or implied, regarding this determination.

5. The appraiser will not give testimony or appear in court because he or she made an appraisal of the property

in question, unless specific arrangements to do so have been made beforehand.

6. The appraiser has estimated the value of the land at its highest and best use and the improvements at their

contributory value. These separate valuations of the land and improvements must not be used in conjunction

with any other appraisal and are invalid if they are so used.

7. The appraiser has noted in the appraisal report any adverse conditions (such as, needed repairs, depreciation,

the presence of hazard wastes, toxic substances, etc.) observed during the inspection of the subject property or

that he or she became aware of during the normal research involved in performing the appraisal. Unless

otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent

conditions of the property or adverse environmental conditions (including the presence of hazardous wastes,

toxic substances, etc.) that would make the property more or less valuable, and has assumed that there are no

such conditions and makes no guarantees or warranties, express or implied, regarding the condition of the

property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or

testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert

in the field of environmental hazards, the appraisal report must not be considered as an environmental

assessment of the property.

8. The appraiser obtained the information, estimates, and opinions that were expressed in the appraisal report

from sources that he or she considers to be reliable and believes them to be true and correct. The appraiser

does not assume responsibility for the accuracy of such items that were furnished by other parties.

9. The appraiser will not disclose the contents of the appraisal report except as provided for in the Uniform

Standards of Professional Appraisal Practice.

10. The appraiser has based his or her appraisal report and valuation conclusion on the subject property As-Is

as of the effective date of appraisal.

11. The Intended User of this appraisal report is Mr. Hugh Jesse, representing the University of Montana. The

intended use is to estimate market value for the property that is the subject of this appraisal, subject to the

stated scope of work. No additional intended users are identified or permitted by the appraiser. The

appraiser's written consent and approval must also be obtained before the appraisal can be conveyed by anyone

to the public through advertising, public relations, news, sales, or other media.


PRIVACY NOTICE

Pursuant to the Gramm-Leach-Bliley Act of 1999, effective July 1, 2001, Appraisers, along with all

providers of personal financial services are now required by federal law to inform their clients of the

policies of the firm with regard to the privacy of client nonpublic personal information. As professionals,

we understand that your privacy is very important to you and are pleased to provide you with this

information.

Types of Nonpublic Personal Information We Collect

In the course of performing appraisals, we may collect what is known as “nonpublic personal

information” about you. This information is used to facilitate the services that we provide to you and may

include the information provided to us by you directly or received by us from others with your

authorization.

Parties to Whom We Disclose Information

We do not disclose any nonpublic personal information obtained in the course of our engagement with

our clients to nonaffiliated third parties except as necessary or as required by law. By way of example, a

necessary disclosure would be to our employees, and in certain situations, to unrelated third party

consultants who need to know that information to assist us in providing appraisal services to you. All of

our employees and any third party consultants we employ are informed that any information they see as

part of an appraisal assignment is to be maintained in strict confidence within the firm.

A disclosure required by law would be a disclosure by us that is ordered by a court of competent

jurisdiction with regard to a legal action to which you are a party.

Confidentiality and Security

We will retain records relating to professional services that we have provided to you for a reasonable time

so that we are better able to assist you with your needs. In order to protect your nonpublic personal

information from unauthorized access by third parties, we maintain physical, electronic and procedural

safeguards that comply with our professional standards to insure the security and integrity of your

information.

Please feel free to call us at any time if you have any questions about the confidentiality of the

information that you provide to us.

REAL ESTATE APPRAISAL FILE #13104 - University … Estate Appraisal_May...The subject property of...

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