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the improvements to arrive at the fair market value per
square foot of the comparable.
For example, Mr. Brown determined that the fair market
values per square foot of the two comparable sales in 1983
were $56.21 and $54.40. He found that the fair market
values per square foot of the two comparable sales in 1987
were $40.98 and $38.14. Mr. Brown then chose the
relatively low value of $40 per square foot as the market
value in 1983 of the subject house, referred to in the
appraisal report as Tract I. Mr. Brown's report explains
his choice as follows:
After the adjustments are made, the fair market
value of Tract I falls in the range of $38 to $56
per square foot in 1983. Since Tract I is one of
the largest homes in the subdivision, it shall
command a loan value per square foot, say $40.
We note that the size of the improvements was already taken
into account in the comparable sales adjustment grid.
Mr. Brown multiplies this value by the square footage
of the improvements on Tract I and estimates that the fair
market value of the property, on the basis of the sales
comparison approach, is $53,200. After further adjusting
the value by his estimate of the cost to reproduce the
house, Mr. Brown's final estimate of the fair market value
of the property is $55,000.
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