The ER replaces the ASFMRA’s traditional “land-mix” procedure that contained multiple computations.  The process converts the “land contribution” within each sale to a mathematical percentage, an expression of the “whole”.  To begin, subject ratios are required to express its mathematic composition (74.48% below).  Then, one (1) unimproved and one (1) improved sale were reduced to the same mathematical “expression” or Equivalency Ratio to ultimately compute the “land-mix” adjustment for each.


 


When this process is repeated for each sale, the percent change between the sales and subject provide the basis for a simple calculation for the differences in “land-mix” or composition disparities. Two sales are shown below, i.e., one unimproved and one improved; plus, three (3) ways to compute the Sale ER’s.


Note for Alternative 2 below:  The $3,000,00 “Land Contribution” is divided by the “Gross Units x Top $/unit” or 1,170 gross units x $3,634.16/acre for Land Type 1 = $4,251,969 which becomes the denominator for the calculation shown inside the smaller box ($3,000,000  ÷ $4,251,969 = 70.56%).




     

         

 

The Land-Mix Summary: 

 ER Factors


 ER Factors

Sale A

70.46%

Sale B

67.54%

Subject

74.48%

Subject

74.48%

% Change (NOT % Difference)

5.71%


10.28%

or = (Difference ÷ Sale Base)

↓


↓

SCA Grid Blended $/Acre

$2,564.10


$2,796.61

% Adjustment

5.71%


10.28%

$/Acre Adjustment

+ $   146.41


+ $   287.49

Land-Mix Adjusted $/Acre

$2,710.51


$3,084.10

 

 

 

 

If the Subject is improved, an additional adjustment may be required — to both sales.  Even though Sale B is improved, the structures may be different sizes, condition, and remaining effective ages and require additional consideration(s), or “+, -, or =” calculations for its final impact on the final price per acre.