Market Area Description
Market Area Description
(formally Area-Regional Description)
There are major changes to the 2020 format describing the Market Area. The design is more open with options for the user to craft a meaningful presentation for supply, demand, trends, and defining the factors in the marketplace effecting value.
The narrative section upper left addresses:
- Competitive Market Area - user defines whether the market is local, multi-county, state, national, or global. The "prompt" in italics is only a reminder to the user, it does not print or PDF.
- Property Types, Commodities, & Operating Arrangements - user defines the primary property types, commodities, and operating arrangements (cash, share, owner/operator). Appraiser may also want to address the type of expenses and expense ratios found for a particular arrangement, i.e., cash = real estate taxes, insurance (if improved), management, and maintenance with market expense rations from x% to y%.
- Impact of Non-Ag Influences - user describes the levels of competition or other uses beside agriculture in the market area. Are those influences expanding, concentrated in one area, or have no impact.
- Economic Base Change - user continues to answer the supply and demand basis supporting the subject's value, i.e., is there a change in economic base from generational family operations to spot rural residential and/or concurrent recreational uses.
The main part of the narrative associated with the positive and negative "market impact" prevalent for the subject's property type allows the user to customize what is important to the valuation process. This type of "narrative" response limits the white space and supposedly channels the appraisers into supporting information pertaining to the subject's value and highest and best use later in the appraisal report. The intent is to specifically avoid 50 pages of Chamber of Commerce information into what is specifically relevant to the valuation assignment.
The last few lines are dedicated to a "Concluding Statement", or answering a basic question after the information has been presented in the narrative portion. That question is, so what?. The point is if the report includes three pages of population information for Smalltown, in County Z, and State R --- what does that mean? How does that information impact the subject's market and value. All information and statements should be directed to its impact on the subject in this section of the report.