Opinion ID: 1807005
Heading Depth: 1
Heading Rank: 1

Heading: The 1965 land contract.

Text: Evans' appraisal indicated a value on the property of $200,000. He testified at length that using the cost-less-depreciation approach, a value of $198,000 was indicated, whereas the capitalization-of-income method reflected a value of only $191,500. Considering the market value of the property along with the other two approaches, his opinion was that the value of the property was greater than the value indicated by either of these other approaches and in his opinion was $200,000. He stated that the 1965 land contract included a premium of $25,000. He observed the very real probability that the property would be condemned and noted that most investors would assume that the most recent sale price would be the minimum condemnation offer. He contended that there were various features of the land contract which he felt indicated why a premium was paid, noting especially (1) the low down payment of $500 ($100 per shareholder); (2) the monthly rental income which exceeded the amount of the monthly land contract payments; and (3) the condemnation clause which provided for a splitting of any loss resulting from condemnation between the seller and the purchaser. Appellant contends that Evans was not aware that the shareholders individually guaranteed this land contract. On the strength of the individual guarantees, the seller was able to increase his mortgage by $55,000, giving him considerably more cash in hand than the mere $500 down payment. However, this in no way affects the actual down payment made by appellant. It still amounted to only $100 cash outlay for each shareholder-investor. This, combined with the rental income in excess of the land contract payments, would indicate how investors could hold the property until condemnation, and the condemnation clause was security against a loss. Should there be no condemnation, the parties might walk away if the seller concluded it would be more profitable for him to take back the property, or they could continue to rent the property, letting it pay for itself. The weight to be accorded the appraisal offered by Evans was for the jury to determine. He gave his reasons for considering that a premium price was incorporated in the 1965 sale. These reasons constitute considerations why the full $225,000 price was inflated and above market. Appellant's contention that he considered some of these factors as possibilities (rather than probabilities) is beside the point because he was talking about reasons why the price was too high and not about his actual opinion as to appraised value.