Why Value?

1. Why Value? Valuations, Methods, Importance Presented by: Mark Farrell G.A. Farrell & Associates Limited

2. Why Value? • The First Question is - • The Value of What? • Real Estate

3. Why Value? • Several Different Types of Value • Several Different Standpoints • e.g. your Home

4. Value As Seen By - Yourself

5. Value As Seen By - Buyer

6. Value As Seen By - Bank

7. Value As Seen By - Valuer

8. Value As Seen By – Tax Assessor

9. Assessed Value

10. Going-Concern Value

11. Insurance Value

12. Liquidation Value, Salvage Value • MARKET VALUE

13. Market Value • The estimated amount for which a property should exchange on the date of valuation – • between a willing buyer and a willing seller • in an arm’s-length transaction • after proper marketing

14. Market Value • Wherein the parties had each acted • knowledgeably • prudently and • without compulsion

15. Valuation Methodology • How do Valuers arrive at Value? • Most Common - • Sales Comparison Approach

16. Sales Comparison Approach

17. Sales Comparison Approach • Often hear comments like: • Market Is Inflated • Actual Costs Are Less • It Is NOT Real Value

18. Sales Comparison Approach

19. Cost Approach

20. Cost Approach • Used For Special-Purpose Properties – • (Brewery, Church, Hospital) • In other Words, Properties that do not sell often • Replacement Cost less Depreciation

21. Is Building Adequately Insured? • Construction costs increasing again • Imperative to check building Insurance • Failure = Financial Hardship

22. Are Buildings Adequately Insured? • Sum Insured (S.I.) $1,000,000 • Current Replacement Cost $1,500,000 • Damage $600,000 • Percentage of CRC 40% • Insurance Proceeds $400,000 • Shortfall $200,000

23. Income Approach

24. Income Approach • Who is a Typical Buyer? • An Investor • What is Primary Concern? • INCOME!

25. Income Approach • Not Primarily Concerned With - • Cost of Building a Substitute • Selling Price of a Substitute • Significant Differences in Commercial Properties • Rent less Expenses • Convert into Value

26. Valuation Methodology • Important Ingredients: • Analytical Skills • Objectivity & Impartiality • INFORMATION!

27. Why Value? • What is Importance of Value? • Bank – In case of Default • Insurance Company - In case of Damage • You - In case of Purchasing / Selling

28. Why Value? • What is Importance of Value? • Investors - In case of Measuring Return • Values Change Over Time

29. Price Movements 1973-2013

30. Achieving Success • Research shows to achieve Success – • Need Proper Mentor. • Some people choose – • Intelligent people • Good-looking people • Sporting or singing stars.

31. Achieving Success • Choice affects chances of success! • Psychologists have designed several tests and quizzes • Contain numbers and personalities • Actually shows chances of Success • Allow me to try on of the quizzes and we will see if it is of benefit to you, ok? • Remember however, I am NOT a Psychologist!

32. Achieving Success: • Pick a number from 1-9......... • Times this number by 3......... • Then add 3............... ......... • Then times by 3 again........... • You should have a two digit number.... • Add these two numbers together..... • You then should be left with a single digit number which will tell you who your all time FAVORITE PERSON is....

33. That is… • George Clooney • President Obama  • Bob Marley • Russell Latapy • Dwight Yorke • Nelson Mandela • John Lennon • Brian Lara • Mark Farrell • Mighty Sparrow

34. THANK YOU! ANY QUESTIONS?