2409.22_20
Page 1 of 3
FOREST SERVICE HANDBOOK
DENVER, CO
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
Region 2 Amendment No. 2409.22-95-13
Effective October 16, 1995
POSTING NOTICE: Amendments are numbered consecutively by Handbook
number and calendar year. Post by document name. Remove entire document and
replace with this amendment. Retain this transmittal as the first page of this
document. The last amendment to this Handbook was Amendment 2409.22-95-12
to 2409.22,20 Contents.
This amendment supersedes Amendment No. 103 to 21.1-21.2.
Page Code
20-21.3
Document Name
2409.22_20
Digest:
20 - Renames and reformats chapter.
ELIZABETH ESTILL
Regional Forester
Superseded
(Number of Sheets)
2
New
(Number of Pages)
3
R2 AMENDMENT 2409.22-95-13
EFFECTIVE 10/16/95
2409.22_20
Page 2 of 3
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
R2 AMENDMENT 2409.22-95-13
EFFECTIVE 10/16/95
CHAPTER 20 - COMPARISON APPRAISALS
21.1 - Introduction. Comparison appraisals frequently provide a cost efficient
method of determining fair-market value. Comparison may be made with another
sale or with Standard Rates. Often what is referred to as a Standard Rate
appraisal is really an appraisal using a comparison with Standard Rates.
When deciding whether or not to use a comparison type appraisal the appraiser
must exercise good judgment. If there are more than a few items that vary from the
case to which comparison is being made, it is unlikely that comparison is the best
choice. The more dissimilar the characteristics between the cases being compared,
the more likelihood of error, the more costly the process, and the more difficult it is
to support. Do not use comparison appraisals for sales 2 million board feet
equivalent volume or greater except to appraise for damages or extensions under
the same method of appraisal as originally advertised. See FSH 2409.18, 45.11 and
45.5 for policy.
21.2 - Comparison With Standard Rates. This is the most frequently used of any
comparison. Following are examples:
1. Sale being appraised meets all the criteria for Standard Rates except it has
a small amount of Specified Road.
2. Sale being appraised meets the criteria for Standard Rates except that the
log haul does not provide for more than one load per truck per day.
3. Sale being appraised meets the criteria for Standard Rates except for a
requirement to make deposits (slash disposal, surface rock replacement, and so
forth.)
4. Sale being appraised meets the criteria for Standard Rates except the
purchaser will have to rent (lease, purchase, etc.) a piece of equipment for a specific
job not included in Standard Rates such as a backhoe, brush piling tractor, dump
truck.
When such variances occur, the difference between base rate and standard rate can
be used to offset the variance. If additional value between base rate and standard
rate remains after absorbing the purchaser credit, subtract any required deposits
from the standard rate.
Show all variances as unit rates per unit of measure in parentheses in Card Type 6
and do not enter in Card Type 7. Show the amount of cost applied to the standard
rate even if the sum of rates exceeds the difference between base rate and standard
rate, including Specified Road Costs.
When a Comparison with Standard Rate appraisal is used in conjunction with a
Residual Value or Transaction Evidence appraisal, apply sale as a whole procedure
R2 AMENDMENT 2409.22-95-13
EFFECTIVE 10/16/95
2409.22_20
Page 3 of 3
by dividing the total of each cost category, except Specified Road Costs, by the total
volume of the sale. Distribute only that portion of Specified Road Costs which
would result in effective purchaser credit to the Comparison to Standard Rate
appraised volume (the difference between Standard Rate and Base Rate).
Distribute any remaining Specified Road Cost to the Residual Value or Transaction
Evidence appraised volume.
Included within the advertised rate is any effective purchaser credit, but excluded
are any other cost variances made. The following examples provide for three
limiting situations:
Standard Rate
Base Rate
Difference
Specified Road Costs
Required Deposits
Example 1
$10.00
6.00
4.00
2.00
0.50
Example 2
$10.00
6.00
4.00
2.00
2.50
Example 3
$10.00
6.00
4.00
5.00
0.50
Advertised Rate is the greater of Standard Rate minus required deposits; or Base
Rate plus Specified Road Costs, not to exceed Standard Rates. Therefore, the
Advertised Rate will be (as indicated below):
Example 1:
Example 2:
Example 3:
$10.00
$10.00
$10.00
- $0.50 = $9.50; or $6.00 + $2.00 = $8.00, not > $10.
- $2.50 = $7.50; or $6.00 + $2.00 = $8.00, not > $10.
- $0.50 = $9.50; or $6.00 + $5.00 = $11.00, not > $10.
The advertised rate in example 1 is limited by the amount of required deposits in
the sale. The advertised rate in example 2 is limited by the amount of specified
roads in the sale. The advertised rate in example 3 is limited by the standard rate.
21.3 - Comparison With Other Timber Sales. Make comparison with another
timber sale only when that timber sale has sold. Comparison, however, should be
made with the appraised price of that timber sale and not with the bid price. The
bid price on an individual timber sale does not reflect fair-market value for many
reasons such as:
1. The bidder may have no intention of making a profit. Tactic could be a
tax write-off, an attempt to discourage a competitor, or an effort to prevent shutting
down a manufacturing facility.
2. Bid may have been a show of bidder's pride and not sale value.
3. Price may be such that bidder defaults without completing performance.
4. Bidder may have a special but limited market which has already been
satisfied for an extended period.
If the appraiser has access to several sales, the average bid price may be used as the
reasons above become moot over several sales and the bid price more accurately
reflects fair-market value than does a previously appraised price. In such cases, use
the average sale characteristics and conditions for those sales for comparison. See
section 90, Records and Reports, for examples.