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4. Another way to view the RDC [i.e., rental
deficit contribution] is as the difference
between the properties [sic] retail price
over its wholesale price. As discussed
above, the sum of the parts is much greater
than the whole. By selling the properties
individually, the owner receives the greater
retail price, while he would get only a
wholesale price if he sold all of the
properties to a single investor in one
transaction. That is, multiple purchases
from the same builder demand a wholesale
price. The discount would be in the range
of the RDC, or a 20%-25% reduction of the
retail price of each unit if sold
separately. The percentage reduction is
supported in the 40-Unit Condominium Complex
appraisal (TAB C). The indicated wholesale
value was estimated at $2,100,000. EPIC
financed the property based on a projected
retail sale of the property of $3,000,000.
The wholesale value is 30% lower than EPIC’s
projected retail value.
5. The 40-Unit Condominium Complex (TAB C) was
valued at wholesale as this was the market
for these types of properties. The values
obtained for the single-family houses in
TAB's A and B of this report reflect the
retail fair market value of the properties.
Multiple sales of single-family houses were
not plentiful at the date of value and at
the present date they are very obscure. A
discount, in the approximate amount of the
RDC, for each single-family property is
required if these house were sold wholesale,
i.e., grouped with a multitude of other
houses, in one transaction to a single
investor. The RDC was chosen as a discount
from retail to wholesale based on the
discussion presented in (4) above.
Significantly, respondent does not appear to take
the position that the builder fees and rent advances are
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