1. (a) When using the cost manual, location factors shall be used to adjust costs to the proper level in each neighborhood.
2. (b) The overall location factor for a neighborhood shall be determined from analysis of individual sales using the basic formula: Location Factor = Improvement Value (Sale Price Less Lot Value)/RCNLD (Replacement Cost New Less Depreciation).

3. (c)

   1. (1) Valid sales of properties from new to three (3) years old should be used for the most accurate work.
   2. (2) Sales should not have substantial improvements other than the house.
4. (d) Any item not being valued from the manual should be subtracted from the selling price.

5. (e)

   1. (1) Accurate lot values are necessary.
   2. (2) Statistical software can be utilized to provide additional analysis and accuracy.
   3. (3) Comparative analysis can be used for neighborhoods where appropriate sales are insufficient.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "Adopted 7/10/01"