1st Reading - Jersey City

Portion of PJP Landfill Site; Jersey CityNew JerseyExplanation of Adjustments (continued)Real Propert Rights ConveyedA transactioii is always predicated onthe real property interest conveyed. Feesimple property rights are,defined as "absolute ownership unencumbered byanyother interest or estate~subject orily tò the limitations imposed by thegoveriimental powers of taxation, eminentdomain, police power and escheat.,,6Fee simple rights bècome.divided when an owner chooses to lease, restríçt use, or,bequeath all or part of his/her property to another party,. In thiscase òther interestor rights are created suchas an estate (inherited), a leasehold estate(tenants'rights), or leas~d fee state (landlords' rights). In this case all the land salesrepresent the conveyance of fee simple property rights, Therefore, no adjustment ', is necessary for this factor.Terms of FinancingThe transaction price of one property may differ from that of an identical propertydue to different financing arrangements, Ifa purchaser obtains advantageous ' 'mortgage terms such as a favorablè financing rate or a higher loan to value ratio, :that buyer could áfforcl to pay morefor a property by applying the savings derivedfrom the favo,rable mortgage terms. One of the components of the definition ofmarket value is the assumptionthatpayment is made in cash, itsequivalent, orinother precisely revealed terms. If one party is advantaged in atransaction, the, resulting sales price maynot be reflective of that property's true market value.. ,',' Therefore, the financing terms, ifany, of all conip~rable'sales must be examined toensure that the terms,at the time of sale were consistent with market rates andrepresentative' of cash or its equ'ival~nt, All the comparable land sales were, bought, with cash or its e,quivalent. Consequently, no financing adjustment is necessary.Conditions of SaleAdjustments fòr condition of sale usually reflect the motivations o'f the buyer,andseller. If a property has a special vaiue to one particularbuyer, that buyer may payabove market price tosecure ownership. Conversely, a seHer may have to sell apropert due to a personal situation. In these instances, a sale does not reflectnormal conditions and is not considered an arms length transaction. Such nonmarketconditions must be identified and adjusted for if a comparablesale is to'refleçt market value, In this case, thorough verification of ea,ch comparable salerevealed that all of the comparable sales reflect normal conditions and all are armslength transactions. No adjustment for this factor was required. '6 The Dictionary òf Real EsrateAppraisal, Fourth Èdition. (Chicago, Ilinois: Appraisal Institute, 2002)VALUE REEARCHGROUP, LLC 28