"If you think it's hard to meet new people, try picking up the wrong golf ball.

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Welcome Members Attendees
Mastering Appraisal Fundamentals Land (1135 to
1230 pm)
Doug Main, MAI, CRE, Director, Deloitte Advisory
"If you think it's hard to meet new people, try
picking up the wrong golf ball. Jack Lemmon
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PresenterDoug Main, MAI, CRE, ASA, CRE, CCIM,
CEC, SGADirector, Deloitte Advisory, Atlanta, GA

• He has testified in District, State, Federal and
  Superior Courts, as well as in various mediation
  and arbitration venues, and has testified more
  than 50 times regarding damages, lost profit,
  bankruptcy, breach of contract, impact of
  detrimental conditions, construction defects,
  shareholder fraud, property tax, and other
  business disputes.
• Managed and coordinated many complex,
  multi-disciplinary engagements in connection with
  mergers and acquisitions, litigation,
  reorganization, reporting, corporate financing,
  tax and estate planning, portfolio valuation,
  operational analysis, damage claims, investment
  and SOWT analyses, highest and best use analysis,
  financial market studies, purchase price
  allocations, and site selection studies.
• Geographic experience is national and
  international (e.g., Aruba, Australia, Bahamas,
  Brazil, Canada, China, France, Germany, Jamaica,
  Puerto Rico, Spain, Trinidad and Tobago, United
  Kingdom, etc.).
• He has published and/or has been quoted in the
  New York Times, Time Magazine, The Washington
  Post, Los Angeles Business Journal, Korpacz Real
  Estate Investor Survey, The Boardroom, San Diego
  Tribune, Baltimore Business Journal, Urban Land
  Institute, Crittenden's Resort Report/Golf
  Business Real Estate, Atlanta Journal
  Constitution (AJC), and Merrill Lynch Waste
  Industry Research Report. Mr. Main was awarded
  Club Consultant of the Year by Boardroom Magazine
  and is a member of and the current Vice President
  of the Society of Golf Appraisers (SGA).
• Speaker at various seminars and/or education
  sessions for the Counselor of Real Estate (CRE),
  Urban Land Institute (ULI), Appraisal Institute
  (AI), American Society of Appraisers (ASA),
  International Right of Way Association (IRWA),
  International Association of Assessing Officers
  (IAAO), and Continuing Legal Education (CLE)
  International.
• He is a Certified Environmental Consultant (CEC)
  and his experience includes properties such as
  large acreage (10,00 acres ), subdivision,
  master panned communities, agri-business (e.g.
  crops, pastures, grain elevators, etc.),
  hospitality, MOBs, hospitals, casinos, commercial
  industrial, manufacture, waste management,
  mining, carbon credits, alternative energy
  business, wetlands, water rights, bio-fuel
  facilities, golf clubs, marinas, solar farms,
  co-generation facilities, intermodals, recycling
  facilities, wineries, hazardous facilities, waste
  to energy facilities, superfund sites, yacht
  clubs, tennis clubs, apartments, timeshares /
  intervals, lifestyle resorts and communities.

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Land Appraisal FundamentalsPiecing it Together
Setting the Table
Growth
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Mind the Gap
The Outlook
Setting the Table
In economics, land is regarded as one of the four
agents of production, along with labor, capital,
and entrepreneurial coordination, and land
provides the natural elements that contribute to
a nations wealth.
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Trends
Unemployment Rate June 2015 Month/Month Year/Year
National 5.3 -0.2 -0.8
Georgia 6.1 -0.2 -1.2
Atlanta 5.8 -0.2 -1.3
Note Metro level data is now seasonally
adjusted.1
Atlanta-Sandy Springs-Roswell Unemployment Trends
Source BLS
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Recovery Expansion Challenges Remain
Atlantas housing market Positive Home Sales
In June, residential sales for Metro Atlanta rose
17.1 percent monthly (the best monthly increase
since 2011) and 9.5 percent yearly to 5,492.
Housing Inventory Balancing Metro Atlantas
housing inventory has been historically low for
some time, but based on the latest numbers, the
market may be turning a corner. In June, there
were 16,680 homes for sale. Thats a 4.1-months
supply and a 3 percent increase year-over-year.
Moderating Home Prices In June, median sales
price was 238,000, a 3.9 percent increase from
last year and a 0.8 percent decline from May.
Average sales price, meanwhile, was 304,000, a
6.3 percent year-over-year increase and a 2.0
percent monthly increase. 
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• Some highlights - Metro Atlanta RE Market
• Listing inventory is up 49 from the bottom of
  February 2013. Inventory is up 5.3 from last
  month and basically flat compared to the same
  month last year.  
• Closings were up 4.9 from last month and up
  12.3 from the same month last year. 
• Months of inventory are now 3.5 months based upon
  the latest closed sales trend. Six months supply
  is considered normal. 
• Buyer activity remains strong led by baby boomers
  and first-time buyers. At the same time, the pace
  of pre-foreclosures (notices of default) and
  foreclosures has slowed dramatically.
• Resales and new homes are the majority of sales.
• New Homes are making a significant comeback but
  that is also showing signs of leveling off as
  builders are having to pay higher prices for lots
  and other costs are rising.  The spread of prices
  between new homes and resale is increasing which
  will benefit resale prices over time.   

Source Metro Atlanta Case-Shiller Index Reported
June 2015
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What a change from a few years ago!  Metro
Atlanta Home Values are up 47.23 from the most
recent low point of March 2012 according to the
Case-Shiller Index.  But remain down 10.95
from the peak of July 2007. 
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The Story is
Source LoopNet
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In Summary, Things Change
After
Before
1991
Dubai, United Arab Emirates 2014
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The Head Lines
Metro Atlanta home prices increased 5.1 in May
41 TV Shows and Movies Filming in Georgia in July
2015
Cameras Rolling -- Away From California State
Falls To Fourth In Film Production
In FY 2015 alone, Georgia-lensed feature films
and television productions generated an economic
impact of 6 billion.
Midtown moving South
SunTrust Park is under construction
Which Atlanta suburb has the largest backyards in
America?
More Millennials living with parents now than
during the recession.
Tech Squares University House set to open in
August 2015. (706-bed university house -
midtowns technology square)
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The Land Challenge
How To Deal With Ambiguity No magic bullet
when it comes to valuing land.  It can be a
challenge, perhaps an impossible goal, to reach
the point of 100 certainty. There is almost
always a way to get reasonably comfortable with a
ballpark value on a property   There are a
number of reliable measurements you can use to
get confident with the value of a prospective
property.
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Land Banking What is Land Banking? The name
implies almost exactly what it is, acquiring LAND
to hold for future sale and/or development.
Clearly not a new concept, and one that has ties
with a passenger on the RMS Titanic
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Land Banking (continued)
We have all heard of the Titanic, and that fatal
journey for 1,503 passengers, and one of them
came from a family know for Land Banking in
America. Can you guess which family, I am
talking about?
Hint He was considered one of the riches men in
the world at the time of the sinking of the
Titanic.
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• What are they thinking
• Ask the question, how important will these
  factors be to the end buyer, developer, investor,
  etc.
• What is the zoning on this property?
• How much inventory is available in the local
  market?
• What are other, similar properties currently
  priced for in the near vicinity?
• At first glance, how desirable is this property?
• What kind of holdings costs are associated with
  this property?
• Is there adequate road access to this property?
  (In other words, how easily can someone get to
  it?)
• What is the size, shape dimensions of the
  property?
• How nearby (or remote) is this property to a
  major metropolitan area?
• What do the adjoining properties look like? Is
  the property surrounded by farmland? forests?
  water? houses? blight? landfill? nuclear waste
  facility?
• Is the property situated in a flood zone? If so,
  what impact will this have on the cost of flood
  insurance? and so on

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• Use Classification
• Land uses can be divided into any number of
  types, depending on market norms, etc.
  Traditionally, most appraisers have divided land
  uses into these major groups
• residential all types
• office
• retail
• industrial
• mixed use
• hospitality
• agricultural
• various special use
• Golf Course
• Tennis and racquetball facilities
• Mobile home parks
• Parking Garage
• Landfills
• Mines
• Marinas

• Dont Forget the Unit of Comparison
• Price per apartment unit
• Price per guest room or key
• Price per bed
• Price per playing court
• Price per pad
• Price per parking space
• Price per hole
• Price per slip
• Price per linear foot
• Price per acre
• Price per animal unit (pastureland)
• Price per board foot (timberland)
• Price per front foot
• Price per square foot
• Price per buildable square foot
• Price per tillable acre
• Price per acre foot

What is NIMBY?
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Market Analysis
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Be sure to identify the competitive differentials
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Market Indicators of Demand for Proposed
Properties and Vacant Land

• Area Examined Indicators of Demand
• Property-specific current and historical vacancy
  rates
• Current and historical rental rates
• Market area current and historical vacancy rates
  for existing competitive space
• Current and historical rental rates for existing
  competitive space
• Construction activitycompetitive space
• Preleasing of planned space and space under
  construction
• Current condition and historical changes in
  fundamental forces of demand
• Macroeconomic area current and historical vacancy
  rates for existing property types
• Current and historical rental rates for existing
  property types
• Construction activityproperty type
• Preleasing of planned space and space under
  construction
• Current condition and historical changes in
  fundamental forces
• Employment levels and foreclosure rates
• Residential occupancy and foreclosure rates
• Income levels and consumer spending

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Demand-Side Factors

• Residential Market
• Population of the market area - size and number
  of households, rate of increase or decrease in
  household formation, composition, and age
  distribution
• Income (mean or median per household and per
  capita)
• Employment types and unemployment rate
• Percentage of owners and renters
• Land use patterns and directions of city and area
  growth and development
• Factors affecting the physical appeal of the
  neighborhood, e.g., geography and geology
  (climate, topography, drainage, bedrock, and
  natural or man-made barriers)
• Local tax structure and administration, assessed
  values, taxes, and special assessments
• Externalities (noise, odors, etc.)
• Others

Retail Market Office Market Industrial Market
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Supply-Side Factors

• Quantity and quality of available competition
  (standing stock)
• Volume of new construction (competitive and
  complementary)projects in planning and under
  construction
• Availability and price of vacant land
• Availability of construction loans and financing
• Costs of construction and development
• Currently offered properties (existing and newly
  built)
• Owner occupancy versus tenant occupancy
• Causes and number of vacancies
• Conversions to alternative uses
• Special economic conditions and circumstances
• Effect of building codes, zoning ordinances, and
  other regulations on construction volume and cost

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Testing Financial Feasibility

• The three techniques used to test financial
  feasibility involve the analysis of different
  measures of economic performance
• land residual analysis
• feasibility rent
• profitability index

For any alternative use of vacant land, the cost
of construction (including an estimate of
entrepreneurial coordination) and the expected
value of the specific property use should be
known. The difference between those figures is
the land residual, which is a primary indicator
of financial feasibility. If the land residual is
positive, the use is considered financially
feasible
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Highest Best Use The valuation process
essentially consists of determining the highest
and best use for the land. The final estimate of
highest and best use should be defensible, the
logic internally consistent, and the conclusions
well supported and documented by facts as well as
opinions. Owners frequently have strong
opinions of the highest and best use of their
land. But emotional attachment, the original
intent for purchaseeven if it was bought 20
years agoand misconceptions about the market can
cloud an owners judgment. Development proposals
therefore should be analyzed objectively. Many
concepts come from architects or land planners
and are focused more on design than economic
issues. It is critical to consider the impact
of value when evaluating each of these
factors. Physical Factors - Physical factors
play an important role in determining land
use. Regulatory and Legal Factors - legally
permissible uses would conform to the lands
current zoning classification and local building
codes along with any other relevant regulatory or
contractual restrictions on land use. Financial
Feasibility - narrows the number of legally
permissible and physically possible uses down
further through analysis of the economic
characteristics of the potential alternative
uses Maximum productivity The remaining
options are candidates for the test of maximum
productivity, which is the finaland
decidingcriteria for the highest and best use of
both the land as though vacant and the property
as improved. The selected highest and best use
obviously should be supported by market demand,
yet this is where most analyses fall short of
support. The Valuation Process - Several
valuation options exist, though some are less
common than others.
Interim Use Excess Surplus Land
The concept of HBU relates to what is done
physically with real estate, and physical land
use should not be confused with the motivation of
owners or users.
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Revisiting Valuation Method Options

• Applicability and Limitations of Land Valuation
  Methods
• Sales Comparison
• Alternative Methods

• Market Extraction
• Allocation
• Income Capitalization Methods

• Direct Capitalization Land Residual Method (land
  residual technique - A method of estimating land
  value in which the net operating income
  attributable to the land is capitalized to
  produce an indication of the lands contribution
  to the total property.)
• Direct Capitalization Ground Rent Capitalization
• Yield Capitalization Subdivision Development
  Method
• (Discounted Cash Flow Analysis)

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Remember Market Extraction
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Importance of Timing
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Reconciliation Stepping Back

• Regarding land valuation
• How was land value estimated - e.g., by sales
  comparison, extraction, or allocation?
• Is there an adequate number of sales?
• Are the sales comparable?
• Is there market support for the adjustments that
  were made?
• Were those factors that could not be supported by
  quantitative adjustment dealt with adequately
  using qualitative analysis?
• Is the range of adjusted sale or unit prices
  within the range exhibited in the market?

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Things I Like do
Linkage Location considers time-distance
relationships, or linkages, between a property or
neighborhood and all probable origins and
destinations of residents coming to or going from
the property or neighborhood. Location has both
an environmental and an economic character. Time
and distance are measures of relative access,
which may be considered in terms of site ingress
and egress, the characteristics of the areas
through which traffic to and from the site
passes, and transportation costs to and from the
site.
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Things I Like do
Pictures worth a 1,000 words.
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• Things I Like do (continued)
• Using technology to discover
• County Assessor
• AgentPro247
• Zillow, realtor.com, trulia.com, MLS,
• Reis.com, netronline.com, etc.

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Things I Like do (continued)
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Q A