Newsday (Nassau Edition) from Hempstead, New York • 113

SMALL BUSINESS Setting the price on firm's property requires great care By Mark Stevens Setting business property values doesn't have to be a guessing game. Independent real estate appraisers can bring professional judgment to the pricing process, protecting buyers and sellers from getting too little or paying too much. Because the parties to a transaction are never impartial, they cannot be relied upon to set accurate values. Opinions come into play, often without regard to market factors. Appraisers, on the other hand, look only at the recognized components of property values.

"When the small business wants to acquire or sell anything from a parking lot to an office building, it needs a reliable estimate of the property's value," says Richard B. Gaskins, acting executive vice president of the American Institute of Real Estate Appraisers. "This estimate should not be prepared by those who list or sell the property. Commission interests may compromise their objectivity." AIREA appraisers consider the following major aspects of property value: The current cost of reproducing a property, less depreciation from all sources that is, deterioration and obsolescence. The value indicated by recent sales of comparable properties and other market factors such as listing and offer activities.

The value that the property's net earning power will support, based on a capitalization of net income. These value components costs, market data and net income have varying importance with each property that comes up for sale. Appraisers must use their skill and experience to assign relative weights to each. "Sometimes, even with new construction, costs and market values can be far apart," says Donald Dorchester, head of an appraisal firm that bears his name. "An architect may design an office building that is right for the client but is so specialized it has little appeal to others.

Appraisers can alert clients of this, advising them if the property they are acquiring is a good investment as well as a good Market value may be defined as "the price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure." In computing value through the market data approach, many appraisers will take the following steps: Analyze sales and rental information for similar properties. Determine the conditions of sale including the prices and other motivating forces. Compare all key aspects of comparable properties and the property being appraised, noting for each the location, physical characteristics and terms of the sale. In addition to price studies, appraisers evaluate properties for marketability and utilization. Fees generally range from $50 to $150 per hour, depending on the appraiser and the complexity of the assignment.

The major caveats in hiring appraisers is to make certain they are independent and of high professional standing. Appraisers awarded official designations of MAI by the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers' SRPA or SREA, have conducted extensive study in commercial appraising. "Independent appraisers can be extremely helpful in making decisions on a wide range of business property investments," says Douglas Dixon, president of First Home Service real estate developers. "It is important, however, to hire someone who has more than just a professional designation. Find an appraiser with a proven track record in the field." Bankers, attorneys and accountants can recommend reputable appraisers.

BOARDROOM CHATTER Computer Associates International Jericho, has signed a letter of intent to acquire all of the outstanding shares of capital stock of Capex Phoenix, for 1.2 million shares of Computer Associates common stock. The purchase price is equivalent to approximately $22.5 million. Both firms market computer software. New York State Labor Commissioner Lillian Roberts recently presented certificates of appreciation to 58 Long Island firms for their cooperation in the Jobs Crusade Campaign. Among the firms honored for listing jobs with the State Job Service were: Comstrom Freeport; Chemical Bank; Dayton R.

Brown, Bohemia; Pergament Distributors Melville; Metco, Hicksville; Long Island Lighting Co. and Grumman Corp. Trans World Material Handling Storage Products Co. Inc. is moving to larger quarters at 2068 East Jericho Turnpike, East Northport.

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Epstein has been awarded a 3-year, $188,000 grant by the Russell Sage Foundation for a study, "Culture of the Workplace: A Study of Problems Affecting Men and Women Workers in the 1980s" The New York State Office of General Services has awarded seven contracts to Nassau County businesses including Canon U.S.A. New Hyde Park, for typewriters, Miltex Instrument Company, Lake Success, for operating and general surgical instruments, and Fruitcrest Garden City Park, for staple groceries, $110,523. Fifteen contracts were awarded to Suffolk County businesses including Commercial Envelope Manufacturing Deer Park, for all State agency envelopes, $1.88 million; of Huntington for small trucks, Silver Chrysler Plymouth Port Jefferson Station, for passenger cars, and The Fire Island Fruit Co. Inc. of Patchogue for produce, $228,261.

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