SDCL 10-11-56: Arms-length transactions included in departmental studies. Any sale which has been verified to be an arms-length transaction shall be included in the annual study. For purposes of this section, the term, arms-length transaction, means the transfer of property offered on the open market for a reasonable period of time between a willing seller and a willing buyer with no coercion or advantage taken by either party. The director of equalization shall analyze each sale to eliminate factors related to the sale which affect the sale price but which do not reflect the actual value of the real property.
Their stand on this is that it is not particularly stating "no relationship between buyer and seller". But, if you read USPAP guidelines, it states:
MARKET VALUE: a type of value, stated as an opinion, that presumes the transfer of a property (i.e., right of ownerchip or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal.
comment: Forming an opinion of market value is the purpose of many real property appraisal assignments, particularly when the client's intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories:
- the relationship, knowledge, and motivation of the parties (i.e., seller and buyer);
- the terms of sale (e.g., cash, cash equivalent, or other terms); and
- the conditions of sale (e.g., exposure in a competitive market for a reasonable time prior to sale).
I have spoken with a few people on this subject, and I believe that we should use the opinions of USPAP and IAAO and leave what we are already doing alone. I would like to know how everyone else stands on this.
Rownea Gerbracht, Perkins County
