C150150 Market Report - Laserfiche WebLink

Home Browse Search

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . property. This approach ~s most applicable to properties that are typically bought and sold specifIcally for their income characteristics. A common application of this approach implies comparison of the property to other similar properties that have been sold, using ratios of net incomes to sale prices. In water right valuations, there is seldom sufficient data to provide a basis for precisely estimating appropriate income streams, costs, capitalization rates, or ratios that may be reliably used for purposes of comparison; consequently, the Capitalization of Income Approach was not relied upon in determining the value of the Keesee Ditch Water Rights. C. Cost Approach In appraisals of improved land, the Cost Approach to valuation is often used to provide an estimate of value. Using this apprqach, an estimate is typically first made of the value of the improv~d property as if vacant, based on a comparison with sales of similar vacant land. The value of the improvements is then estimated (based on a calculation of their cost new less accrued depreciation), and added to the land value. Except in the cases of some conditional water rights, and sales of water rights separate from land, the appraisal of water ri~ts almost always entails the evaluation of an "improved" property - there is generally a ditch or reservoir associated with such rights to facilitate the diversion or storage of water. Consequently, the value of water rights improvements is usually an integral part of the total land and water value, rather than a comp6nent which can be added on to the "value as if vacant." For this reason, the strict application of the Cost Approach is not readily applicable to most valuations of water rights, and the Market Data Approach generally provides a more reliable indicator of water rights value. The Cost Approach has been used sparingly. Page 25 of 66