Evening star., 1924-02-02

AZ from pure residence to first or Sec
ond commercial, is not necessarily
deterioration In value. For example.
is being taken over by commerce. yet
fore.
The safe practice in appraisins
land would seem to be az follows:
!. Obtain the square foot values by
ta) recent sales, which, II Of corner
lots should be reduced by applying
the formula to middie-square rates;
then by (b) tax assessments, (c) and
by consideration of the character of
improvements and neighborhood ten
denotes. Add tho three different esti-
mates and divide by three. The re-
suit should be the average square font
value for the middle OF the block,
and all lots In the block except the
lots next the corner add S per cent
for residence and 10 per cent for
business blocks and the corner lots
add So per cent OF the middle block
rate for residence, or rs per cent foy
commercial blocks.
The result is the probable market
value. and 10 too high for loaning
purposes. Reduce this figure 25 per
cent for loaning purposes.
States suppo~itious Case.
For example,. suppose the recent
sales indicated a square-foot value of
q corner lot, at $3.50, which would re-
duce divide by 1.56) to $3.50 in the
sessment Is $1.25. reducing similarly
to so cents; that the estimate, after
considering the kinds ,sof buildings,
the people and the tend eucies. places
land in the middle OF the block at
cents plus $1.5e is $3.50. divided bv
>. equals $3.50: reduced by one-fourth
equals So. cents, or, In round num-
neFs. u a square foot the lots next
the corner would rate at $L05 4 foot,
and the corner lot at. $1.55. This
would be safe appraisal, for loan :
ing. -
Valuing improvements does not neces-
sarfly require expert builders knowl-
edge. The appraiser is to- determine
In the market, not what they cost to
oufld or, Will cost to reproduce. and,
In fact, the value Of the improve
ments may be entirely out of rela-
ton to either construction or to re-
production cost. At the same time
about construction costs as a check
on his own Judgments.
Computation OF Values. i.
In valuing improvements there are
numbers OF indicia of yalue-(D
income from improvements. t2) cost
OF construction, {D cost Of present
reproduction, tD quality of construc-
ability to neighborhood and neigh
borhood tendencies. C6) expense of
maintenance. and ca character of
location.
What building produces is gem
orally the acid test of it's real value.
.If the building will yield $1,000 In
rent 1t is earning on a value basis,
II the land is worth $4,000. OF $4,000
Tor the building. Take the example
another way for greater clarity:
suppose we have a lot worth 1000,
e0x100 feet. and we erect a house on
1t costing $4,000. We have a total
Investment of $4,000. The ground
should net per cent. 500 a year.
and the building 6 per cent, S9O0-or
$1,000 clear. Allowing an annual de-
probation of per cent. $3.50. taxeI
$40. insurance SIS. the building must
rent for Sl40 month to earn per
cent on the $4,000 building and s
per cent on the $4,000 land value
When Building Becomes Old.
When a building becomes old-in
these days of rapid city changes that
may not be so long-unless it can be
remodeled, II may be an actual in
jury to the value of the land it covers.
But what building cost originally
to build is an element to consider II
the building has q present useful
quality. with, of course, due reduc-
tions for the age of the structure. A
building that is of good brick, well
constructed. in the mild climate of
able nifty or seventy-five years il the
neighborhood has not changed too
greatly. What it cost. IL very old.
may have small bearing, however, on
the present market value
Whether recent or older. the an