Value Workers Japan_Narrative Appraisal Report

[Appraisal Approaches]

We named our narrative report "Detailed Summary Appraisal Report".
It is different from "Self-Contained Appraisal Report" at the point that it sets the reason-comprehensibility above the completeness. It stresses explanations on the issues that will meet the users' information-needs.

Report is available in Japanese (which fulfills Japanese standards), or in English (which fulfills US or International standards).

In principle, we try to apply following three approaches.

1. Cost Approach
This approach indicates the value by focusing on the cost.
2. Market Approach
This approach indicates the value by focusing on the market.
3. Income Approach
This approach indicates the value by focusing on the income.

(Notes)
Please note; In Japan, we can hardly apply Direct Sales Comparison Method for built-up properties, except for condominiums, etc. This method is thought to be not so reliable in Japanese real estate business customs based on short actual-service-lives of buildings, high prices of lands, and highly-detailed zoning regulations.
Also, in built-up areas, we can hardly apply Cost Approach for lands. This would be common also in other countries.
On the other hand, for lands suit for condominium constructions or for subdivision developments, we will apply Development Method.

[Importance of Detailed Report]

We recommend our "Detailed Summary Appraisal Report" supported with high level communications.
In some types of properties, large differences may appear among the values indicated by each approaches.
Under the prolonged asset deflation in Japan, sales prices of commercial properties had been much lower than their values indicated by Cost Approach.
We could not explain those reasons adequately in "Brief Appraisal Reports". So clients could not realize the reasons why their values are so low. There occured mountains of troubles.
Narrative Appraisal Reports with high level communications could have prevented such troubles.

e.g.;

< City Hotel >
There was such a case, "construction cost (including land value) was JPY 10,000,000,000.
Company went bankrupt, and the disposal price was JPY 2,000,000,000 three years later".

< Resort Hotel >
Onerous sales of resort hotels of which business got worsened were sometimes difficult.

< Super Market >
There was such a case, "construction cost (including land value) was JPY 7,000,000,000.
But the disposal price was JPY 300,000,000 ten years later".

< Golf Course >
There was such a case, "development cost (including land value) was JPY 15,000,000,000.
But the disposal price was JPY 1,000,000,000 ten years later".

< Ski Resort >
There was such a case, "development cost (including land value) was JPY 23,000,000,000.
But the disposal price was JPY 300,000,000 ten years later".

< Hospital, remote from city >
A hospital (12 years old) went bankrupt.
Value indicated by the Cost Approach was JPY 600,000,000.
But, there was no buyer even at JPY 60,000,000.

**(Documentation Requirements)**

Please prepare following documents.

(e.g.; Office Building)
1. Documents to identify the subject property. (copy)
2. Property tax notice. (copy)
3. Building drawings. (copy)
4. Confirmation of construction of the building. (copy)
5. Lease agreements (copy)
6. Long-term repair schedule, or Engineering Report. (copy)
7. Purchase contract. (copy)
8. Other data & documents (copy)
-- Any additional data, if needed.

Appraisal & Valuation
Value Workers Japan


	E-mail: info@value-workers.co.jp
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