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AND
NEW YORK, FEBRUARY 8, 1913
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EFFICIENCY IN APPRAISING VALUES
How to Go About It—Factors That Affeqt the Operation—Ana¬
lyzing the Factors—Unit Values—The Mathematical Operation.*
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By E. W. DOTY.
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case of cotton cloth after the expert has
judgeiJ the value of a unit of that cloth;
namely, a yard.
Let us analyze the possibilities under
this method. 'When you say that land
on a street is worth $500 a unit foot and
on another street it is worth $1,000 a
unit foot, you really mean that the sec¬
ond street at that point is worth twice
as much as the first street. This leads
us to see that it is the usefulness of our
city streets that we must estimate be¬
fore we can come to a real judgment of
the value of the sites abutting.thereon.
It is not really site value that we assess
or appraise, but really street value.
What we commonly call site value or
lot value is that part of the usefulness
of the street that a particular piece of
ground absorbs, and that absorption is
based upon the amount of ground there
is, its shape, and the relation of both
to the street. This latter is mathematical
and may be ascertained by mathematics;
valuing the street—or the unit value,
which is but another expression of the
value of the street—is the mental side of
the problem.
Analyzing the Factors.
When we come to analyze the factors
that enter into or aflect the value of a
single lot, we find that there are not less
than three such factors. These three
are size, shape and location. Sometimes
there are two location factors, as in the
'case of a corner lot, and sometimes there
is an alley factor; but we will consider
only the three that are in every city lot.
â– When you say to me that a lot over on
the main street any city is worth
$50,000 you mean that a lot of a certain
size, of a certain shape and in a par¬
ticular place in that city is worth
$50,000. If you change any one of these
three factors, you change the value to a
suin greater or less than $50,000 prob¬
ably.
It is difficult for the human mind to
make comparisons of things in combi¬
nation. The natural way is to separate
each kind by itself and make compari¬
sons in that way. It is easy for the hu¬
man mind to compare a square lot with
a triangular lot; that is, shape with
shape; it is easy to compare a lot con¬
taining 10,000 square feet of area with a
lot containing 5,000 square feet; that is,
size with size; and it is easy to compare
location with location, a comparison that
more people in a ci'ty make from day
to day than any other.
So we see that it is necessary to sep¬
arate size, shape and location and con¬
sider each separately. The unit foot
makes this possible, because the unit
foot is always the same size and the
same shape, and it is located in the mid¬
dle of each block, thus leaving the varia-
(Continued on page 293.)
MUCH is being said in the magazines
and upon the platform about the
lack of efficiency. This lack of efficiency,
as I view it, is largely traceable to the
lack of analysis. We are all of us prone
to attempt performance without know¬
ing exactly what the task is, what parts
make up its whole. In other words, we
lack analysis. Especially is this lack
of analysis noticeable in the task that
we call appraising land values, or as-
'sessing the value when the land is taken
in connection with the tax department.
You are engaged in the real estate
business. Many of you are called upon
trom time to time to express opinions
as to the value of sites, and your clients
always, or nearly always, depend upon
you for your judgment of value. You
are accustomed to give these opinions
with perhaps little thought as to just
what factors you base your judgment
upon. And yet you never give an opin¬
ion but that you consciously or uncon¬
sciously analyze the factors that cause
you to form your opinion.
The great trouble is that generally
speaking you will not consider all of the
factors, or you will consider them out
of proportion with each other, without a
specific analysis of what you are at¬
tempting to do. The result is that you
are much more liable to form your opin¬
ion based upon prices actually demanded
or paid for that or similar property; and
then it is more difficult for you to sub¬
stantiate your opinions even to your¬
self.
If we will all of us analyze the task
of appraising before we attempt to per¬
form it, we will be able to give our
clients safer opinions of the values of
city real estate.
Forming an Opinion.
Upon examination and reflectio.i we
find that the expression of the judg¬
ment of value of a site is but the form-
in,g and uttering of an opinion. But we
find that there are two elements in the
forming of that opinion. In other words,
there are two things done to express an
opinion of value of a city site: One is
mental, the other is mathematical. The
mental operation, of course, cannot be
done by machinery or by a system. Any
number of reasons may aflfect the mi-id
of a person about to express an opinion.
His mind will sort ut all of those that
appeal to him, weigh them and consider
them. The simpler the conditio.is for
considering all of the factors, the easier
ihe mind operates, the more certain is
the result of its operation. An expert in
cotton cloth considers many facts in ap¬
praising a case of such merchandise, but
•Synopsis of an address by E. W. Doty, rep¬
resenting the Manufacturers' Appraisal Com-
[laiiy and the Somers Unit System of Realty
Valuation, before the New York State Real
Estate Association at Binghamton.
he does not e-xpress his opinio-i of more
than a unit of that cloth, .a yard; nor
does he examine every piece of goods
in the case, nor all of one piece, but
rather a very small part of one piece
will answer his purpose. Having exer¬
cised his judgment of the value of that
kind of cloth in that market, the ex¬
pression of value is made i.i the price of
one unit.
Ne.xt comes the mathematical side of
the operation, which the same expert
may perform or which may be performed
by others. A clerk can ascertain the
number of units of cloth in the case and
multiply and set down the result, which
is really the judgment of the expert as
to all of the cloth in the case. This
operation is just as divisible in judgi.ig
site values as it is cloth values, or ought
to be.
First, a Unit of Quantity.
When we come to judge site value we
find further analysis necessary; 'that is,
analysis of the factors that affect it. To
perform the mental side of the task eas¬
ily we ought to have a unit of quantity.
Land in cities is the only commodity—if
we may call it a commodity—that is
bought and sold, for which we have no
unit of quantity. If you tell me that
land on the next street is worth $500 a
front foot, there are four reasons why I
don't know exactly what you mean.
First, I don't know how deep the lot
is over there, I don't know whether the
side lines of the lot are parallel or not,
I don't know whether there is an alley
at the rear or not, and I don't know
whether you mean a frontage at or near
or far away from the corner. You have
to explain each of these items to me be¬
fore you have conveyed to me all that
you mean by $500 a front foot.
If you and I had 100 of these opera¬
tions to go through, you would have
to make 400 explanations to me just to
convey your opinions to me. Would it
not be better for us to agree upon some
unit, say a foot wide, 100 feet deep, with
no alley, and the location in the middle
of the block? With such a unit of quan¬
tity you can convey to me definite and
certain information or opinion which I
can criticise and converse about.
A Mathematical Operation.
If we should do this, we would be
able to perform the mental side of our
task much easier, because we could talk
with more people and absorb more rea¬
sons for our final opinion. Having ex¬
pressed our opinion as to the value of a
unit foot, the other part of the task could
be performed by anyone who has mathe¬
matical knowledge of the relation which
size and shape bears to size and shape.
Such work is comparable to the work of
the clerk who ascertains the value of the