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  #1  
Old 12-10-2008, 01:10 PM
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Artyman1200 Artyman1200 is offline
 
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Default 4-3-2-1 Rule

Has anyone used this in a report (eminent domain especially)? How do you support it?

For those that don't know, it applies to land value -

First Quarter of depth - 40% of value
Second Qrt of depth - 30% of value
Third Qrt of depth - 20% of value
Fourth Qrt of depth - 10% of value
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Old 12-10-2008, 01:25 PM
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Daniel .. I have seen it espoused for years but I personally have never been able to find the market data with which to support the analysis.
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Old 12-10-2008, 01:31 PM
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It came from the same text book that explains the 10% cap rate rule.
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Old 12-10-2008, 01:43 PM
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Howard Klahr Howard Klahr is offline
 
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The concept is somewhat similar to that of rent zones in a retail center. Anchor space typically is the destination generator receiving a benefit for this characteristic as well as the large size. Smaller in line spaces at a higher rent with units like end-caps or proximity to anchor tenant reflecting higher levels. Pad sites with superior visibility at even higher levels.

One issue however is that the use of the site is a factor. It is obviously more reliable where location/visibility is a greater influence. For a residential property (subdivision) the weighting may be less or just different. In this case an interior lot may be superior versus on on the road frontage or near the development entrance.
  #5  
Old 12-10-2008, 04:12 PM
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Quote:
Originally Posted by daniel burch View Post
Has anyone used this in a report (eminent domain especially)? How do you support it?

For those that don't know, it applies to land value -

First Quarter of depth - 40% of value
Second Qrt of depth - 30% of value
Third Qrt of depth - 20% of value
Fourth Qrt of depth - 10% of value

In PA the Strip Appraisal--partial take form includes the following verbiage:

The value of the land being acquired or affected shall be based on the contributory unit land value of the entire site. The total value shall also include the contributory value of any site improvements located upon the land areas being acquired or affected, including, but not limited to, paving, fencing, trees, shrubbery, etc.

Haven't heard tell of the 4-3-2-1 approach in a dog's age--first heard it from my father who retired years ago.

Currently working on a Penndot project involving strip takes and we apply the above cited methodology--different jurisdictions may have different requirements.

Please note that this approach assumes no severance damages.

Last edited by Pittsburgh Pete : 12-10-2008 at 04:14 PM. Reason: clarity
  #6  
Old 12-10-2008, 04:19 PM
EDWARD BERRY EDWARD BERRY is offline
 
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Caps Are For My Old Eyes.

It Come Over With Colombo.

It Is A "prospective" Tool. Might Be Accurate Or Might Not Be.

I Usually Plot It And Try At Least To Find Sales Indicating The Lower (10%) Value.

One Time I Was Able To Graph The Size From Really Deep To Normal And Show A Correlation.

Use It, If It Works-write It Up.

Arkie Ed
  #7  
Old 12-10-2008, 04:23 PM
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I've used it before. I mostly see it when I'm looking at sites that are very narrow in relation to their overall size. I have also seen a few examples of it with sites that had minimal depth and lots of frontage relative to their overall size.
  #8  
Old 12-10-2008, 05:58 PM
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For DOT projects, I have the occasional property owner that believes their .25 acre of road frontage is worth more than the other 5 acres of their property. Sometimes this is true and other times it's not depending on the property as Howard pointed out.

For those that have used this approach how do you support it and/or explain it?
  #9  
Old 12-10-2008, 06:04 PM
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If the data shows a trend then I note it, if it doesn't then I note that.
  #10  
Old 12-10-2008, 07:42 PM
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Quote:
Originally Posted by daniel burch View Post
For DOT projects, I have the occasional property owner that believes their .25 acre of road frontage is worth more than the other 5 acres of their property. Sometimes this is true and other times it's not depending on the property as Howard pointed out.

For those that have used this approach how do you support it and/or explain it?
I suppose they don't realize that, assuming the take is a straightforward strip take along the boundary fronting the road, and assuming that the total site area is 5.25 acres, they will still have .25 acre of frontage and only 4.75 "back" acres after the take.
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