Estate of Eldon L. Auker, Deceased, Kimberlee J. Auker, Independent Personal Representative - Page 43

                                       - 43 -                                         

        be improper to determine Fair Market Value of a large block of real           
        estate on a market comparable method of single parcels of real estate         
        without applying a discount."                                                 
             Mr. Shanker performed a four-factor analysis in reaching his             
        conclusion on the applicability of a 20-percent discount.  He began           
        by analyzing the depth of the market.  He stated:                             
             Depth of the market can be described as the quantity of                  
             transactions, interest in the properties, and potential                  
             activity both on the buying and the selling sides of the                 
             market.  Depth is a product of many factors, including the               
             total amounts of properties, the breadth of distribution                 
             among the general public and the overall activity in the                 
             market.  If the block is so large that it would be                       
             difficult to sell over a short period, the application of a              
             market absorption discount is necessary to arrive at Fair                
             Market Value.                                                            
        Mr. Shanker concluded that the applicable market at hand had a                
        "limited market depth" because the appraisers had to look outside the         
        Genesee County area to find data on comparable sales.  Mr. Shanker            
        concluded that this factor was a "strong indicator" that a market             
        absorption discount should be applied to the subject property.                
             Mr. Shanker then analyzed the size of the subject property               
        vis-a-vis the total property in the market in terms of both the               
        actual number of properties being sold and the level of activity in           
        the market.  He concluded that this factor favored applying a market          
        absorption discount to the subject property.  He stated that the              
        apartment complexes totaled approximately 20 percent of the                   
        comparable apartment market based on number of units.  He stated that         






Page:  Previous  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  Next

Last modified: May 25, 2011