1989 #10, 4-25-89

In re: FRED AND BESSIE FANNING, Case No. 386-00115, Chapter 12

The above captioned matter came on for hearing before this Court on April 25, 1989 pursuant to FmHAs valuation motion. The debtors, together with their counsel Mr. Tom Tobin, appeared and Farm Home appeared through their counsel Mr. Tom Lloyd. Maynard E. Sweet testified as appraiser for the debtors along with the debtor Fred Fanning. Clayton Kline testified as appraiser for FmHA.

The Court has considered all the testimony offered together with Exhibits A and B and Exhibit 1. In this particular case by virtue of the diversity between the appraisal methods employed by the two appraisers, the Court is left with no alternative but to accept one or the other appraisal. Normally, if the two appraisers use the same techniques which include the cost approach, income approach, and market data or comparative sales, the Court has a basis for comparison of the techniques of the respective appraisals. In this particular case the appraiser for the debtors has developed a system unique unto himself. However, it does not allow the Court to readily compare his method with that of the creditors appraiser. In fact, on cross- examination the appraiser for the debtor admitted that he did not make any adjustments as to soil class, time, percentage tillable, or any other standard classifications for adjustment. He indicated he "pulled out parts", however, there was no rationale as to how he accomplished this or the values he arrived. I am sure by virtue of the fact that Mr. Sweet has been appraising since 1962, he has developed a technique akin to Justice Potter Stewarts approach to defining pornography of "I know it when I see it", to establishing a value for the property he is working with. However, the result in this case showed a rather uninformed comparison and left the Court with no alternative but to basically disregard the same, by virtue of the fact that Mr. Sweet could give no explanation for his determination of value. On the other hand, Clayton Klines appraisal is more in conformity with what is recognized as a standard appraisal and he could at least present plausible explanations for the approach that he used.

While his approach may not be perfect, it did go a long way towards satisfying the Court that he spent a considerable amount of time and effort to inform himself of the comparable sales in areas and for a basis for comparison by using the soil types, the percent tillable, and other factors to be considered in comparing different tracks of land in an effort to make sure that they were truly comparable sales, meaning that price was not the only factor considered, something that was not done by the appraiser for the debtors.

The debtor Fred Fanning also testified as to his opinion of the value of the real estate, however, Mr. Fannings knowledge was confined to the Christenson sale and a recent sale to Magness, however, there was no other indication of any particular knowledge or familiarity on his part.

Accordingly, the Court is satisfied considering all the testimony and the exhibits herein that the Court has no alternative but to adopt the value of $167,850.00 as. the market value of the above described property.

Counsel for FmHA may prepare proposed findings of fact and conclusions of law to the Court.