Real Estate Appraisal Forum

appraisersforum.com logo
The Premiere Online Community for Real Estate Appraisers!
 Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
 
 
Go Back   Appraisers Forum > Real Estate Appraisal Forums > General Appraisal Discussion
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 10-29-2009, 09:52 PM
SunbeltAppraisals's Avatar
SunbeltAppraisals SunbeltAppraisals is offline
 
Join Date: Aug 2007
State: Florida
Professional Status: Certified Residential Appraiser
Posts: 152
Default an acceptable remaining economic life for a newer CB home is 100 years.

My last SRA supervisor told me an acceptable remaining economic life for a newer CB home is 100 years. Her argument being there are plenty of frame homes that are 100+ years old. The default remaining economic life with WinTotal is 60 years.

Remaining economic life is the number of years between the date of an appraisal and the date a property improvement will cease to have any economic value, even if it will still be structurally sound.

Is she correct?

Where does the default remaining economic life from WinTotal originate?

Thanks for your help!
__________________
Carpe diem.
Sponsored Links

  #2  
Old 10-29-2009, 09:55 PM
George Hatch's Avatar
George Hatch George Hatch is offline
 
Join Date: Jan 2002
Location: Carlsbad, California
State: California
Professional Status: Certified General Appraiser
Posts: 16,653
Default

Well, one place they got it from is the Depreciation table in Marshall and Swift.
  #3  
Old 10-29-2009, 10:43 PM
Lee in L.A.'s Avatar
Lee in L.A. Lee in L.A. is online now
 
Join Date: Jan 2002
Location: Los Angeles / Reseda, CA
State: California
Professional Status: Certified Residential Appraiser
Posts: 8,096
Default

Some parts of a home last longer than others. I wonder how many 100 yo homes have the original fixtures, plumbing electric. Never mind HVAC, carpet, paint. That mostly original house would have "good bones" by now.

Edit, good bones, at best.
  #4  
Old 10-29-2009, 10:44 PM
Restrain Restrain is online now
 
Join Date: Jan 2002
Location: Port Charlotte, FL
State: Florida
Professional Status: Certified General Appraiser
Posts: 10,503
Default

In some areas, homes go over 100 years. In other areas, 50 year old homes are tear-downs. It all depends on the market, how the homes are maintained, etc. A frame home that is not well maintained may last 40 years...if lucky.
  #5  
Old 10-29-2009, 10:46 PM
Mountain Man Mountain Man is offline
 
Join Date: Jan 2002
Location: North of the ATL.
State: Georgia
Professional Status: Certified General Appraiser
Posts: 15,390
Default

Yes there are homes 100 years old, and even older in the UK. But, these homes have been meticulously maintained, extensively rehabed at some point recently, and were not allowed to just deteriorate. As GH said, most depreciation models are based on M&S. Consider that a house, of ANY construction, would deteriorate to dust if not properly maintained.
  #6  
Old 10-29-2009, 11:35 PM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
 
Join Date: May 2002
Location: Springtown, AmeRica
State: Arkansas
Professional Status: Certified General Appraiser
Posts: 39,888
Default

You can extract that from the marketplace. This is more accurate than PFA. In lieu of that, you can go to the M & S tables for the info or to a residual table such as NBC (National Building Cost) book. Residual tables and M & S are market derived numbers that are not straight line depreciation.
NBC goes from 55 - 70 years but has a table for using 'age' vs % good. Using the quality class, you go to the table and there are 3 rows. Chronological age Rem Life and % Good... Use the actual age for newer construction, use the Rem Life estimate by estimating the "effective age" under the appropriate total life column. Means also has a residual table as did the old Boeckh system.

But you can easily extract the total life from newer construction. Say a 5 yr old house sold for $230,000 where the (current) land value is $50,000 and the dwelling (current) RCN is $200,000. 230,000 - 50,000 = 180,000. 200,000 less 180,000 means it has lost 20,000 worth of value in 5 years, or $4,000 per year.
4,000 200,000 = 0.02 (2%) per year.... 1/x (reciprocal) = 50 years...total life. thus remaining life is 45 years.

200,000 x 45/50 (90%) = 180,000 + 50,000 lot value = $230,000

Do all your comps that way. That "Purity of Application" thingy...

Older remodeled homes will need to be vetted for effective age. A judgment call. Nothing wrong from evoking your "judgment"...and yes, they do have houses that are 600 years old. But 600 years ago they didn't have electrical, plumbing or other modifications that are an on-going process with older houses.
__________________
The only difference between a tax man and a taxidermist is the taxidermist leaves the skin-Twain
.
  #7  
Old 10-29-2009, 11:50 PM
Lee in L.A.'s Avatar
Lee in L.A. Lee in L.A. is online now
 
Join Date: Jan 2002
Location: Los Angeles / Reseda, CA
State: California
Professional Status: Certified Residential Appraiser
Posts: 8,096
Default

Quote:
200,000 less 180,000 means it has lost 20,000 worth of value in 5 years, or $4,000 per year.
But, don't home prices always go up?

J/K Terrel, You are a fountain of information. I mean that in a good way.
  #8  
Old 10-30-2009, 12:01 AM
DMZwerg's Avatar
DMZwerg DMZwerg is offline
 
Join Date: Mar 2009
State: Wisconsin
Professional Status: Certified Residential Appraiser
Posts: 4,485
Default

Quote:
Originally Posted by Mountain Man View Post
Yes there are homes 100 years old, and even older in the UK. But, these homes have been meticulously maintained, extensively rehabed at some point recently, and were not allowed to just deteriorate. As GH said, most depreciation models are based on M&S. Consider that a house, of ANY construction, would deteriorate to dust if not properly maintained.
There is also construction quality.

Poor quality homes may fail or need serious rehab after only 20 years (+/-)
Fair, a bit longer (I think 30-40)
...

So as the lower quality homes deteriorate faster (even given maintenance) and are replaced the quality homes that were well maintained are actually just hitting their stride.

So you have quality of construction affecting overall lifespan, maintenance (with random chance of being ill-maintained and dropping in condition), and so forth. So yeah, 100+ year old homes do exist, and so too do 300+ year old homes, but that does not change that the remaining economic life for a new built home is probably 60 years.

Think of it as "half-life", or the point half will be obsolete or gone.
Same hold true for electronics including light bulbs, fridge, freezer, and other things such as water heaters, furnaces, roofs, etc (aka, they each have a life expectancy that some will outlive and some will fall short of).
__________________
- D. M. Zwerg

Being a fee appraiser is like being unemployed and constantly looking for work.
  #9  
Old 10-30-2009, 01:25 AM
Green Hornet's Avatar
Green Hornet Green Hornet is offline
 
Join Date: Dec 2006
Location: Puget Sound
State: Washington
Professional Status: Certified Residential Appraiser
Posts: 1,632
Default

It seems that the real variable is the maintenance. A 100 year old home with no up keep, probably ready for the landfill.

I did my training in a metro area. Many of the home were brick facade, stick built and over 100 years old. Many were better quality than 50 year old home. As with any structure they need some sort of up keep. A new roof, gutters, exterior paint, etc.

I remember one brick home that was over 110 years old. Probably had some updating at some point. Still had knob and tube wiring, lathe and plaster, single pain windows and an octopus, oil furnace, converted from coal in the basement. They ran the furnace for 15 minutes on the hour and the whole house was nice and warm. Probably good for another 110 years...if maintained.

Leave the freeways empty for 100 years and you would never know they were there!

So is the economic life expectancy what it would be without any maintenace, or what it would be left empty on its own?
  #10  
Old 10-30-2009, 06:05 AM
jay trotta's Avatar
jay trotta jay trotta is offline
 
Join Date: Feb 2004
Location: Snowglobe
State: Connecticut
Professional Status: Certified Residential Appraiser
Posts: 6,387
Question

Terrell, good info and I agree with Lee, but I think GreenHornet has made an excellent point and where you added in the Land Value (50,000) current I have a question.

If the land value is current value wouldn't that skew the numbers ? What if land values increase ? Generally, if land values are on the rise (limiting commodity-value increase) or am I overthinking this ?

Additionally, in the first years of ownership, there is generally limited maintenence required - the 5-10 year period is when the maintenence increase's (normal wear & tear) cost to cure becomes a factor. I believe this is when the depreciation factor becomes an estimated soft cost factor and tempts the appraiser into thinking (via -M & S) it can be done comfortably.

Forms of depreciation are wide ranging, and when I did the insurance thing, we used many factors to determine "depreciation", which was always questioned. It always came down to a give N take thing - for settlement purposes. In this business, the appraiser is/has been the scapegoat for insurance purposes and take on the position in the target area. Over the years this has lead the Banking Industry to "push" everything onto the appraiser's plate, because we RELY on that Industry. In order Not to loose a Client, we have overstepped our bounds in What we should supply, after all, we are Licensed/Certified to render an "opinion" of value, based on "market influences". We are Not, licensed home inspectors / electricians / plumbers / roofers / window & door inspectors / heating-AC inspectors OR Energy Audit compliance inspectors.....all of which Require a "License" in my State.
The public will always have an option to buy New Construction or that Better than New product and it will always come down to; an "Emmotional Choice" - which is most difficult to reconcile. Why did they choose one or the other ? Ahh, that theory of substitution......

As soon as a new product comes out, the advertising that hits the appraiser is unbelievable; become a Home Inspector or become an Environmental Auditor.......yada, yada- if all it takes is a few days worth of schooling ($1,500 to $2,500 for that sheep skin)to become an expert in ANY field, why are so many "Out of Work" today ??

cheers
Sponsored Links

Closed Thread


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump




Copyright © 2000-, AppraisersForum.com, All Rights Reserved
     Terms of Use  Privacy Policy
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com

Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
Partner Sites:
AppraiserUSA.com - National Appraiser Directory AllDomainsUSA.com - Domain Name Registration
DeadbeatListings.com - Deadbeat ListingsAppraiserSites.com - Web Hosting for the Professional Real Estate Appraiser
Find FHA Appraisers - FHA Appraiser Search Commercial Appraisers - Commercial Appraiser Search
Relocation Appraisal - Find Relocation Appraisers Domain Reseller - Business Opportunity
Home Security Buzz - Home Security Info Radon Testing - Radon Gas Info
My Medicare Forum - Medicare Info Stop Smoking Help - Help Quitting Smoking
CordlessPhoneStore.com - Great Cordless Phones AndroidTabletCity.com - Android Tablet Computers

Follow AppraisersForum.com:          Find us on Facebook            Follow us on Twitter


All times are GMT -5. The time now is 09:47 PM.

SiteMap: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93