14-4 Property Values

Please explain the process you used to select each matched paired analysis in Rhode Island.

RESPONSE 14-4

Selection of matched pairs is a time consuming process, and there is no difference in the process whether the assignment is a waste transfer station, a wind farm, a power plant, or some other facility. In the process below, the generic word “facility” is used.

First, research is conducted to find a facility similar to that being proposed in a comparable location. In this instance, the Ocean State natural gas plant was chosen. Although not a natural gas plant, the Spectra Energy Compressor Station shares some characteristics of a natural gas plant and also was considered for study.

Second, sales of residential properties in proximity to these facilities are researched. It is preferable to find sales that are arm’s length transactions and that sold without significant discounts for condition. It is also preferable to find properties that are close to the facility being studies in terms of distance. Finally, it is imperative to choose sales where there are no other issues that could have impacted value, for example, proximity to both a power plant and a waste transfer station. Usually, there are very few sales that meet the criteria. Ideally, a sale and resale of the same property is available; however, this is a rare occurrence.

Third, sales of similar properties that occurred under the same market conditions in the broader market area are researched.  Care must be taken to find properties located in substantially similar geographic areas, and which are of similar site size, similar construction vintage, similar room counts, and similar finishes. Further, the property must not be proximate to a use that might negatively impact the value of that property; for example, a house next to a freeway would not be considered.  As might be expected, no two properties are ever identical, and often no matched pair can be developed. 

Finally, if a sale of a property near an existing facility can be matched with a similar property located away from such a facility that occurred under very similar market conditions, the sale prices of the two properties can be compared. Admittedly, this analysis requires appraisal experience and judgment.

RESPONDENT:

Mike Marous, MAI, CRE, MaRous & Company

DATE:       August 18, 2016