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Valuation of The California Motel
The Ohrmund Report
In valuing the California motel, all the experts start with
the Ohrmund report. Accordingly, we start there too. The
Ohrmund report concluded that the December 18, 1995, value of the
California motel was $1,388,000. The Ohrmund report states that
the appraisal of the property “has been made with the
understanding that the present ownership of the subject property
includes all rights that may be lawfully owned, and therefore,
title in ‘fee simple’.” Consequently, in valuing the California
motel, the Ohrmund report did not consider any effect of
decedent’s one-half ownership interest in parcel 2.
The Ohrmund report employed three methods of estimating the
market value of the California motel: the cost approach, the
sales comparison approach, and the income approach, which yielded
value indications of $1,100,000, $1,374,000, and $1,400,000,
respectively.4 The Ohrmund report correlated these three values
to reach its final estimate of $1,388,000.
Respondent’s Expert
Smith adopted the Ohrmund report’s $1,388,000 value for the
California motel.
4 To reach the $1,374,000 value indicated by the income
approach, the Ohrmund report applied a capitalization rate of
13.5 percent to estimated annual net income of $192,536.
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