The Appraisal SUMMER 2018 Journal Volume LXXXVI, Number 3 F Highest and Best Use and Property Rights—Does It Make a Difference? by Stephen F. Fanning, MAI, AI-GRS, Larry T. Wright, MAI, SRA, AI-GRS, and Rick J. Muenks, JD, MAI PAGE 171 Land Value Differentials Resulting from Variability between the Sales Comparison and Income Approaches in Timberland Valuation by Austin B. Harris, Christopher N. Singleton, MAI, and Thomas J. Straka, PhD PAGE 192 Market Value: What Does It Really Mean? by Michael V. Sanders, MAI, SRA PAGE 206 Contents The Appraisal Journal | Summer 2018 | Volume LXXXVI, Number 3 ii Mission Statement iv Annual Conference Announcement v A Message from the Editor-in-Chief COLUMNS & DEPARTMENTS 161 Cases in Brief Recent Court Decisions on Real Estate and Valuation by Scott B. Mueller, JD 219 Resource Center Self-Storage and Eminent Domain Resources for Appraisal Institute Professionals by Dan L. Swango, PhD, MAI, SRA 233 Letters to the Editor PEER-REVIEWED ARTICLES 171 Highest and Best Use and Property Rights—Does It Make a Difference? by Stephen F. Fanning, MAI, AI-GRS, Larry T. Wright, MAI, SRA, AI-GRS, and Rick J. Muenks, JD, MAI 192 Land Value Differentials Resulting from Variability between the Sales Comparison and Income Approaches in Timberland Valuation by Austin B. Harris, Christopher N. Singleton, MAI, and Thomas J. Straka, PhD 206 Market Value: What Does It Really Mean? by Michael V. Sanders, MAI, SRA ANNOUNCEMENTS 235 Appraisal Institute Publications 237 Appraisal Institute Continuing Education 239 Article Topics in Need of Authors 241 Manuscript Guide 242 Appraisal Journal Order Form Cover Photo: Shutterstock.com www.appraisalinstitute.org Summer 2018 • The Appraisal Journal i The Appraisal Journal Published by the Appraisal Institute James L. Murrett, MAI, SRA, President Stephen S. Wagner, MAI, SRA, AI-GRS, President-Elect Jefferson L. Sherman, MAI, AI-GRS, Vice President Jim Amorin, MAI, SRA, AI-GRS, Chief Executive Officer Stephen T. Crosson, MAI, SRA, Editor-in-Chief Ken Chitester, APR, Director of Communications Nancy K. Bannon, Managing Editor Justin Richards, Senior Communications Coordinator The Appraisal Journal (ISSN 0003-7087) is published quarterly (Winter, Spring, Summer, and Fall). © 2018 by the Appraisal Institute, an Illinois Not-for-Profit Corporation at 200 W. Madison, Suite 1500, Chicago, Illinois 60606. www.appraisalinstitute.org. All rights reserved. No part of this publication may be reproduced, modified, rewritten, or distributed, electronically or by any other means, without the expressed written permission of the Appraisal Institute. Periodical postage paid at Chicago, Illinois, and at additional mailing offices. Annual Subscription Rates: Domestic—$48 standard rate, $100 library rate, $38 AI rate, $20 student rate, $25 single copy. International—$95 standard rate, $145 library rate, $65 student rate. Telephone orders: 312-335-4437. Online orders: http://www.appraisalinstitute.org/store/periodicals/the-appraisal-journal/ Postmaster: Send address changes to Order Fulfillment Department, The Appraisal Journal, 200 W. Madison, Suite 1500, Chicago, Illinois 60606. Allow six weeks for changes. To opt out of print copy delivery, email [email protected] Design and production services provided by Grayton Integrated Publishing. www.graytonpub.com Mission Statement: The Appraisal Journal is published to provide a peer-reviewed forum for information and ideas on the practice and theory of valuation and analyses of real estate and related interests. The Appraisal Journal presents ideas, concepts, and possible appraisal and analytical techniques to be considered; some articles are for the development and expansion of appraisal theory while others are useful in the evolution of practice. Disclaimer: The materials presented in this publication represent the opinions and views of the authors. Although these materials may have been reviewed by members of the Appraisal Institute, the views and opinions expressed herein are not endorsed or approved by the Appraisal Institute as policy unless adopted by the Board of Directors pursuant to the Bylaws of the Appraisal Institute. While substantial care has been taken to provide accurate and current data and information, the Appraisal Institute does not warrant the accuracy or timeliness of the data and information contained herein. Further, any principles and conclusions presented in this publication are subject to court decisions and to local, state, and federal laws and regulations and any revisions of such laws and regulations. This publication is for educational and informational purposes only with the understanding that the Appraisal Institute is not engaged in rendering legal, accounting, or other professional advice or services. Nothing in these materials is to be construed as the offering of such advice or services. If expert advice or services are required, readers are responsible for obtaining such advice or services from appropriate professionals. Nondiscrimination Policy: Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state, and local laws. The Appraisal Institute advances professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. ii The Appraisal Journal • Summer 2018 www.appraisalinstitute.org The Appraisal Journal Editorial Board Stephen T. Crosson, MAI, SRA,* Chair, Dallas, Texas Joseph F. Consoli, MAI, Baltimore, Maryland Karl P. Finkelstein, MAI, Mt. Pleasant, South Carolina Julie Friess, SRA, Sedona, Arizona Walter E. Gardiner, SRA, AI-RRS, Hammond, Louisiana James H. Martin, MAI, Mt. Pleasant, South Carolina Heather M. Placer, MAI, SRA, Midlothian, Virginia Stephen D. Roach, MAI, SRA, AI-GRS, San Diego, California Larry T. Wright, MAI, SRA, AI-GRS, Houston, Texas The Appraisal Journal Review Panel Gregory J. Accetta, MAI, AI-GRS, Providence, Rhode Island Melanie Sieger, MAI, AI-GRS, Chevy Chase, Maryland Anthony C. Barna, MAI, SRA, Pittsburgh, Pennsylvania Dan L. Swango, PhD, MAI, SRA, Tucson, Arizona C. Kevin Bokoske, MAI, AI-GRS, AI-RRS, Ft. Lauderdale, Florida James D. Vernor, PhD, MAI, Atlanta, Georgia Robert C. Clark, MAI, Chevy Chase, Maryland George Dell, MAI, SRA,* San Diego, California The Appraisal Journal Academic Review Panel Larry O. Dybvig, MAI, Vancouver, British Columbia Tim Allen, PhD, Florida Gulf Coast University Timothy A. Eisenbraun, MAI, SRA, Southfield, Michigan Anjelita Cadena, PhD, University of North Texas Stephen F. Fanning, MAI, AI-GRS,* Denton, Texas Peter F. Colwell, PhD, University of Illinois Kenneth G. Foltz, MAI, SRA, Wilmington, North Carolina François Des Rosiers, PhD, Laval University Jack P. Friedman, PhD, MAI, SRA, Chicago, Illinois Barry A. Diskin, PhD, MAI, AI-GRS, Florida State University Brian L. Goodheim, MAI, SRA, Boulder, Colorado Donald R. Epley, PhD, MAI, SRA, University of South Alabama Robert M. Greene, PhD, MAI, SRA, AI-GRS, Olympia, Washington Jeffrey D. Fisher, PhD, Indiana University Thomas O. Jackson, PhD, MAI,* College Station, Texas Terry V. Grissom, PhD,* University of Missouri–Kansas City John A. Kilpatrick, PhD, MAI, Seattle, Washington Thomas W. Hamilton, PhD, MAI,* Roosevelt University S. Warren Klutz III, MAI, SRA, AI-GRS, Bristol, Tennessee William G. Hardin III, PhD, Florida International University Douglas M. Laney, MAI, Tucson, Arizona Mark Lee Levine, PhD, JD, MAI, University of Denver Calvin M. Lassere, MAI, Atlanta, Georgia Kenneth M. Lusht, PhD, MAI, SRA,* Florida Gulf Coast University, David C. Lennhoff, MAI, SRA, AI-GRS, Darnestown, Maryland Penn State University Mark R. Linné, MAI, SRA, AI-GRS, Lakewood, Colorado Barrett A. Slade, PhD, MAI, Brigham Young University Mark E. Mitchell, MAI, Louisville, Kentucky Brent C Smith, PhD, Virginia Commonwealth University Dan P. Mueller, MAI, St. Paul, Minnesota Mark A. Sunderman, PhD, University of Memphis Nathan Pomerantz, MAI, Rehovot, Israel Grant I. Thrall, PhD, University of Florida Rudy R. Robinson III, MAI, Austin, Texas Alan Tidwell, PhD, University of Alabama Dennis P. Ryan, PhD, MAI, New York, New York H. Shelton Weeks, PhD, Florida Gulf Coast University David J. Sangree, MAI, Cleveland, Ohio John E. Williams, PhD, Morehouse College John A. Schwartz, MAI, Aurora, Colorado Elaine M. Worzala, PhD, College of Charleston *Statistics Work Group member www.appraisalinstitute.org Summer 2018 • The Appraisal Journal iii From the Editor-in-Chief Stephen T. Crosson, MAI, SRA A New Look at the Basics Dear Readers: Welcome to the latest issue of The Appraisal Jour- The third article, “Market Value: What Does It nal. In this issue, you will find three feature arti- Really Mean?” by Michael V. Sanders, MAI, cles that take a new look at some basic elements SRA, reviews the market value concept and how in the valuation process. it has evolved into differing definitions. The dis- cussion illustrates how highest price and most The first article, “Highest and Best Use and probable price differ and how assumptions about Property Rights—Does It Make a Difference?” the market may affect the valuation. by Stephen F. Fanning, MAI, AI-GRS, Larry T. Wright, MAI, SRA, AI-GRS, and Rick J. In this issue you will also find the Journal’s Muenks, JD, MAI, suggests that a supported and ever-popular “Resource Center” column by Dan reasoned highest and best use analysis should Swango, PhD, MAI, SRA. In the