Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017 Page: 5,937
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(ii) All applicable forms of depreciation must be dis-
cussed and analyzed. Such discussion must be consistent with the de-
scription of the improvements.
(iii) The land value estimate should include a suffi-
cient number of sales which are current, comparable, and similar to the
subject in terms of highest and best use. Comparable sales information
should include address, legal description, tax assessor's parcel num-
ber(s), sales price, date of sale, grantor, grantee, three (3) year sales his-
tory, and adequate description of property transferred. The final value
estimate should fall within the adjusted and unadjusted value ranges.
Consideration and appropriate cash equivalent adjustments to the com-
parable sales price for subclauses (I) - (VII) of this clause should be
made when applicable.
(I) Property rights conveyed.
(II) Financing terms.
(III) Conditions of sale.
(IV) Location.
(V) Highest and best use.
(VI) Physical characteristics (e.g., topography,
size, shape, etc.).
(VII) Other characteristics (e.g., existing/pro-
posed entitlements, special assessments, etc.).
(B) Sales Comparison Approach. This section should
contain an adequate number of sales to provide the reader with a
description of the current market conditions concerning this property
type. Sales data should be recent and specific for the property type
being appraised. The sales must be confirmed with buyer, seller, or an
individual knowledgeable of the transaction.
(i) Sales information should include address, legal
description, tax assessor's parcel number(s), sales price, financing con-
siderations and adjustment for cash equivalency, date of sale, recor-
dation of the instrument, parties to the transaction, three (3) year sale
history, complete description of the Property and property rights con-
veyed, and discussion of marketing time. A scaled distance map clearly
identifying the subject and the comparable sales must be included.
(ii) The method(s) used in the Sales Comparison
Approach must be reflective of actual market activity and market
participants.
(I) Sale Price/Unit of Comparison. The analysis
of the sale comparables must identify, relate, and evaluate the individ-
ual adjustments applicable for property rights, terms of sale, conditions
of sale, market conditions, and physical features. Sufficient narrative
must be included to permit the reader to understand the direction and
magnitude of the individual adjustments, as well as a unit of compari-
son value indicator for each comparable.
(II) Net Operating Income/Unit of Comparison.
The Net Operating Income statistics or the comparables must be cal-
culated in the same manner. It should be disclosed if reserves for re-
placement have been included in this method of analysis. At least one
other method should accompany this method of analysis.
(C) Income Approach. This section must contain an
analysis of both the actual historical and projected income and expense
aspects of the subject Property.
(i) Market Rent Estimate/Comparable Rental Anal-
ysis. This section of the report should include an adequate number of
actual market transactions to inform the reader of current market con-
ditions concerning rental Units. The comparables must indicate cur-rent research for this specific property type. The comparables must be
confirmed with the landlord, tenant or agent and individual data sheets
must be included. The individual data sheets should include property
address, lease terms, description of the property (e.g., Unit Type, unit
size, unit mix, interior amenities, exterior amenities, etc.), physical
characteristics of the property, and location of the comparables. Anal-
ysis of the Market Rents should be sufficiently detailed to permit the
reader to understand the appraiser's logic and rationale. Adjustment for
lease rights, condition of the lease, location, physical characteristics of
the property, etc. must be considered.
(ii) Comparison of Market Rent to Contract Rent.
Actual income for the subject along with the owner's current budget
projections must be reported, summarized, and analyzed. If such data
is unavailable, a statement to this effect is required and appropriate
assumptions and limiting conditions should be made. The Contract
Rents should be compared to the market-derived rents. A determina-
tion should be made as to whether the Contract Rents are below, equal
to, or in excess of market rates. If there is a difference, its impact on
value must be qualified.
(iii) Vacancy/Collection Loss. Historical occupancy
data and current occupancy level for the subject should be reported and
compared to occupancy data from the rental comparables and overall
occupancy data for the subject's Primary Market.
(iv) Expense Analysis. Actual expenses for the sub-
ject, along with the owner's projected budget, must be reported, sum-
marized, and analyzed. If such data is unavailable, a statement to this
effect is required and appropriate assumptions and limiting conditions
should be made. Historical expenses should be compared to compara-
bles expenses of similar property types or published survey data (such
as IREM, BOMA, etc.). Any expense differences should be reconciled.
Include historical data regarding the subject's assessment and tax rates
and a statement as to whether or not any delinquent taxes exist.
(v) Capitalization. The appraiser should present the
capitalization method(s) reflective of the subject market and explain
the omission of any method not considered in the report.
(I) Direct Capitalization. The primary method of
deriving an overall rate is through market extraction. If a band of
investment or mortgage equity technique is utilized, the assumptions
must be fully disclosed and discussed.
(II) Yield Capitalization (Discounted Cash Flow
Analysis). This method of analysis should include a detailed and sup-
portive discussion of the projected holding/investment period, income
and income growth projections, occupancy projections, expense and
expense growth projections, reversionary value and support for the dis-
count rate.
(10) Value Estimates. Reconciliation of final value esti-
mates is required. The Underwriter may request additional valuation
information based on unique existing circumstances that are relevant
for deriving the market value of the Property.
(A) All appraisals shall contain a separate estimate of
the "as vacant" market value of the underlying land, based upon current
sales comparables. The "as vacant" value assumes that there are no
improvements on the property and therefore demolition costs should
not be considered. The appraiser should consider the fee simple or
leased fee interest as appropriate.
(B) For existing Developments with any project-based
rental assistance that will remain with the property after the acquisition,
the appraisal must include an "as-is as-currently-restricted value". For
public housing converting to project-based rental assistance, the ap-
praiser must provide a value based on the future restricted rents. ThePROPOSED RULES October 27, 2017 42 TexReg 5937
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Texas. Secretary of State. Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017, periodical, October 27, 2017; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth897027/m1/25/?q=%22%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.