Market Rent Study.interest appraised?

[Pittsburgh Pete]

Where is SS when you need him?

Be careful what you wish for..............!!!!!!!

 

[PropertyEconomics]

That was the thrust of his original question!! Thus the "locked" in nature of my responses.

Pete .. I appreciate your position, however, stating that the OP is not appraising property rights or trying to discern which rights are being appraised misses the point that in fact the assignment is an appraisal. It is a consulting assignment with a value conclusion ... Rent. The OP must realize that or the miss the scope of their assignment all together.

 

[Ken B]

Since, in appraisal practice, "value" must always be qualified, how would you describe the "type" of value a rent represents?

 

[PropertyEconomics]

Since, in appraisal practice, "value" must always be qualified, how would you describe the "type" of value a rent represents?

USPAP Q&A, Vol. 9, No. 2 from the ASB says that a market rent study is an appraisal, "USPAP defines an appraisal as having an opinion of value, and market rent is an expression of value for the right to use a property."

 

[DWiley]

Well, I am no SS, but I did stay at a Holiday Inn Express last week

Developing and reporting an opinion of the market rent for the space IS an appraisal - it is not an appraisal of the whole bundle of rights, but it is an appraisal of the rights to use and occupy space for a specified time. That is the interest that is being appraised.

This has been discussed in an example in AO-21 since about 2000 ( See example 3, page A-72, lines 233-251, current USPAP).

The opinion of market rent should be developed under STANDARD 1 and reported under STANDARD 2. One of the requirements is to provide the applicable definition of value. When I perform such assignments the definition of value that I typically cite is "Market Rent" from the Dictionary of Real Estate Appraisal.

STANDARDS 4 and 5 might apply if the assignment also involved making a recommendation of some kind based on the market rent opinion.

 

[Michigan CG]

Market Rent
The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessee and lessor each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee under conditions whereby:
1. Lessee and lessor are typically motivated.
2. Both parties are well informed or well advised, and acting in what they consider their best interests.
3. A reasonable time is allowed for exposure in the open market.
4. The rent payment is made in terms of cash in United States dollars, and is expressed as an amount per time period consistent with the payment schedule of the lease contract.
5. The rental amount represents the normal consideration for the property leased unaffected by special fees or concessions granted by anyone associated with the transaction.

 

[DWiley]

Tim,

Also remember that in a Summary Report one must cite the source of the defn

:new_smile-l:

DW

 

[Michigan CG]

Tim,

Also remember that in a Summary Report one must cite the source of the defn

:new_smile-l:

DW

Dictionary of Real Estate Appraisal, Fourth Edition, CD Version

 

[LACKLAND27]

Greetings all, I am performing my first market rent study, and I'm looking for some guidance. My client is needing a opinion of market rent for a medical office space. They need to confirm that the rent they are agreeing to pay is close to market rent levels. My question is....am I appraising an "interest" in the property? If at all? Leased Fee or Leashold? Previous appraisals from other appraisers in our office have said they are appraising the leased fee interest. In my opinion, based on the scope of work and the level of information I am providing, I am not appraising an interest in the property at all.Does anyone have any advice, comments, etc?Thanks

If the report is prepared as a market study and offers only a range of rents in a particular area for a particular type property, but does not refer to a subject property it certainly would not be an appraisal and no rights are involved. Just get 4-5 rental comps and offer a range of rents in the area. But do not refer to the subject in the report.

Happy Holidays :new_xmas:

 

[PropertyEconomics]

If the report is prepared as a market study and offers only a range of rents in a particular area for a particular type property, but does not refer to a subject property it certainly would not be an appraisal and no rights are involved. Just get 4-5 rental comps and offer a range of rents in the area. But do not refer to the subject in the report.

Happy Holidays :new_xmas:

I dont think the scope of work will allow the OP not to refer to the property nor do I think the assignment is not for a specific property. The client is asking if they are paying proper market rent for a specific property they are considering.
I believe this is a consulting assignment that offers an opinion of value (market rent) and is in fact an appraisal. I would think the OP much safer and more in compliance with USPAP treating it as such.
With due respect to your post, it merely seems to be attempting to circumvent the real issue of the OP .. a market rent study doesnt appear to have been ordered ... moreso an appraisal of market rent for a specific property appears to be their intent, IMO.