There has been a lot of talk from Mayor Shumaker about "greedy" property owners

We have covered the first half of this sentence with one penny, where we point out that 3/4 or 75% of the property owners have never offered their land for sale, received an offer, or made a counter offer. 

In short, greedy property owners are not asking anything for their land.

The second part ...what their land is worth. Is covered below because the Mayor is on TV talking about property appraisals.   Your webmaster is very familiar with the Rogers Gardens appraisal, so lets talk about it, so you can appreciate (pun intended) the "worth" to which the Mayor keeps referring.

The appraisal to which the Mayor keeps referring was done 3 years ago for Bristol Motor Speedway by appraisers hired by BMS.  The speedway asked us if they could do an appraisal of our property because they said they were looking to buy land around the track and they wanted to use our land value as a guide.  (BMS is across the street from us, so why not just appraise their own land?)  Anyway, we said that would be fine, as long as we got a copy of the appraisal.  What we did not know is that simultaneously they asked to appraise the three other properties now being assaulted by the Bristol land grab.  Now, we all know what properties the track wanted to buy. 

It appears to us that they came to the conclusion that a land grab might be cheaper than a land buy.

So, it's an old appraisal!
It was done for the track
It was paid for by the track

That should be enough to tell you that it would be a low end of the spectrum appraisal, but we would like to show you how the BMS appraisal was fundamentally designed to lower the value of the property.

Not everyone has ever seen a commercial appraisal, so lets talk about them for a second. 

The first thing any commercial appraisal tries to do is determine the "highest and best use" for a property.  This catch phrase is often regurgitated by the Mayor as what he wants for our property.  However, in the capitalist system, private citizens are allowed to develop their property to its fullest potential.  Only under the communist system, is the state responsible for developing property to its fullest potential.  

We have had our own appraisals done on our property, both before and after the race track's attempt at valuing our property. Both stated that the "highest and best use" of this land, was vacant land for a campground and parking cars.  By the way, that is exactly what we are trying to do with our property.  See Property Plans.

A commercial appraisal is in many ways like a home appraisal.  In a home appraisal, a house is compared to similar houses in similar areas that have recently sold to arrive at a valuation.   Likewise, commercial land is compared to similar commercial land in similar areas that have recently sold to arrive at a price.  In our case, there is not any land directly across the street from the race track that has sold in recent years.  So the comparison to land transactions "elsewhere" in town does not make a for good comparison.  But that is all right.  Why?  Because, unlike a home appraisal, a commercial appraisal also looks at the revenue that can be produced by a commercial property.  By determining estimated income and projecting that forward in time, you can arrive at a value for a property.  The appraiser takes the highest of the two approaches, or even an average, if they are reasonably close. 

On both appraisals we had done, the revenue method always produced the highest value for our property.  Note that the only source of revenue used on our appraisals was from running a campground and/or parking cars.  No revenue or profit from our retail garden center; our wholesale marketing of our Oregon nursery stock; our rental properties; or our trucking company was used in the calculations, even though all these businesses operate on or from this property.  Nor was any potential revenue considered from leasing the land out to anyone else for the other 50 weeks of the year, when it is quiet across the street.  This was purposely done so that the appraisal would be conservative and low.  After all, the last person you ever want to dupe, is yourself.

Our appraisal, visually, would look something like this:

Here is our lot, (I know our lot is not square) each blue car represents a camper/car (don't count them, its not the amount that will fit)  Each camper/car pays a certain amount.  This happens twice a year.  Then we pay for things like parking attendants, insurance, water, electricity, etc. and you now have a net profit.  This is projected out for a few years; some standard calculations are done and "poof", we have a property value. 

Now let's look at the appraisal that BMS' appraisers did for BMS on our property. 

The race track's appraisal comes straight from the land of make believe (yes, I got in a Mr. Rogers joke).  Their appraisal "pretended" that there was an auto dealership on our property.  The dealership's buildings, took up half the lot.  You just can not pull a camper into the dealership's accounting department, or the paint shop, or the show room, etc...

Consequently, they could only fit half the campers/cars that we can with vacant land.  Just like our appraisal, their appraisal did not consider any business income from their auto dealership, but they did include some of the expenses, like moving the dealership's car inventory off of the lot to make room for race fan parking, renting land on which to store the car, wages for moving the auto inventory, etc....

Congratulations, you never spent a day in real-estate school, yet you can see that the BMS appraisal value would be at best 1/2 of a realistic appraisal value.

Did BMS' appraiser do anything wrong?  No.  In fact, BMS' appraisers are very skilled and highly respected by the community and us.  The appraiser was given by their client, BMS, a set of assumptions to work with in doing their appraisal.  This is done in commercial appraisals all the time. 

For example, when our last appraisal was done, all our camping spots were assumed to have electric power, even though they don't yet.  This increased both our estimated revenue and expenses, and resulted in a higher property value than "as is".   But to be fair and proper, the appraiser subtracted from the higher final value, the total cost we would have to spend to get the property in that "assumed state."

BMS' appraiser was told a "car dealership" would be on the property, and that reduced the property value.  Why?  Forget the math above, its because a "car dealership" is not the "best and highest use" for the property.  Simple. 

BMS would have done better to tell the appraiser that they wanted a 10 acre NASCAR museum on the property.  With almost the entire land covered by a building, the race fan parking revenue would be so low (due to so few spaces) that the revenue approach would make the land cheaper per acre than most residential property in Bristol.

So, in the end, you now know what an commercial appraisal is...somebody's educated opinion as to what the property is worth.  What is it really worth?    The estimate of the value only exists in the minds of property buyers and sellers.  In Mr. Rogers case, neither person exists right now.  The real market price is truly unknown until established by voluntary transaction, the actual sale of the property  See Capitalism

In conclusion:

"Greedy" property owners asking for more their land than what their land is worth.  

IS FALSE!

Why?
#1: Nothing being asked and no discussions with buyers
#2: Consider who initiated and paid for an appraisal when the "worth" is defined

The final thought, all real estate appraisals make a basic assumption; that you will find in writing:.  That the appraisal price assumes a "motivated" buyer and a "motivated" seller. 

In this case 75% of the land owners are not "motivated" to sell.  They are only "motivated" to keep their land from the paws that would swipe their property in the Bristol land grab.