External obsolescence prove it exists

[Joyce Potts]

Final Answer

With all due respects that means his profit is $55000 less then he is the dumbest builder in the history of real estate.

But did I prove it?

 

[Jim Bearden]

But did I prove it?

No, if that is your argument you need to give me a real life example. But my point remains somebody doing it is an idiot because that is illogical. Unfortunately being stupid is not against the law.

 

[Fred]

Let's move to the the 12th Edition of AI's The Appraisal of Real Estate (2001) below. Same old, same old. It adds nothing new to Mr. May's "vintage" premise.

Not true.

May indeed links superadequcy to components. However, the Institute dictionary that I have does not limit superadequacy to components: "excess capacity or quality of a structure - or - structual component." I put in the dashes.

The AI books are not the "same same" as May because they never recognized superadequacy as limited to "components" or overimprovement as economic obsolescence. Take the 2nd edition of the AI text, which is contemporaneous with May. It does not limit functional depreciation to components: "unsuitability in design or capacity." Going back further to the Schmutz book which is the forerunner to the first edition, he lists over and under improvements as "functional."

Remember before I posted that when the Society and Institute had different philosophies about the cost approach; and when the memberships mergered, the textbooks did not?

 

[Joyce Potts]

I proved it

No, if that is your argument you need to give me a real life example. But my point remains somebody doing it is an idiot because that is illogical. Unfortunately being stupid is not against the law.

Illogical is also NOT against the law.

Were you looking for real life or theoretical proof? Specificity my friend. The builder may have started out thinking logically, but the market may have proved him wrong. Perhaps his asking price on the property not affected by the RR tracks had the same asking price as the one that did.

I've seen it happen in real life. If builders or participants in the market place didn't make stupid or unexpected mistakes, we wouldn't have a job. (Some of us, anyway.)

 

[xm72mhd]

-article 1 states: My real problem isn't with that statement as much as it is with the fact that it is basically the textbook definition of Functional Obsolescence!

I suspected that from my initial look the thread. Ben is behind or we all got swept up in the appraisal game of hide the definition, or choose your own defintion, or what ever this thing is called. Fortunately for us if we keep our favorite text book handy we can convince anybody but us about what it we are taking about. There is an upside, with the way this is going nobody outside of this profession can prove any of us wrong as long as the guys we quote are still in print.

Someday we need to have a discussion about whose defintiion is best, but that aside this is interesting, but (surprise) I agree with Geiger, in his new and charming persona, that we are dealing with gthe new versus the old. Ben, you're outa date, and none of us would have known, except you told us. Out with the old economics stuff, till they come back that is.

It's all about which version, or which book, or which prof you got it from.

Appraising is a word game in the end, and Steven advertises it's about really about value. Does anybody deal with this in review? Denis? I can just see a comment. The appraisal relies on an outdated and discredited (according to AF) defintion of EO.

 

[Fred]

Edd,
A few times I have posted a certain 50-year old quote that talks about a body of knowledge rife with conflicting ideas and terms. I wonder if that hasn't changed slightly with the AIREA-SREA merger and not for the better.

The question I asked Ben and Bill before about their SRA designations having come from the Society was not trivial. The Society and Institute clearly had a different take on the cost approach. Since the merger, which appears to me to be more of a hostile takeover, the "Society" has not only disappeared as an organization name (with "Institute" remaining), but the Society body of knowledge is now to be found only in out-of-print books.

I mentioned it to them becasue I think this has ethical consequences. Someone from AI peer review can make a prima facie case that Ben is quoting from books that are not "recognized" even if they are more valid - because this material contradicts the AI text ed 10, 11 and 12, etc.

I think we all lost something with the demise of the Society. In the 90's, when I was trying to get to the bottom cost approach conundrums, I discovered that the Society works were a treasure trove of good ideas. That Arthur May book that Ben cited is contemporanrous to, but far superior to and 15 years ahead of, the first few editions of the Insititute text.

 

[Terrel L. Shields]

Arthur May book

but i thought May is a big fan of the conventional cost approach and the 'Three Approaches'? You?

 

[Ben Vukicevich SRA]

Steven,

"Remember before I posted that when the Society and Institute had different philosophies about the cost approach; and when the memberships mergered, the textbooks did not?"

We merged in 1982? The first photo I posted was from a joint SREA & AIREA text book which labels it EO. Seems EO had both their blessings in 1982. Doublespeak in the appraisal field. Never.


__________________

 

[Ben Vukicevich SRA]

OK, you guys have me in the middle of my installation of my new superadequate (FO as to price) Internet rated best, Toto Drake water saving toilet in my over-improved dwelling (EO) LOL.

You know the last time I did this was when I installed a new ceramic tile floor in the master bath room. I had a ball point pen on the floor and what is the probability that when I was installing the bowl, I would kick the pen, watch it bounce off the CT floor trim 2 or 3 times, shoot across the floor and head straight down the open 3" line for the toilet. I couldn't shoot pool that well with bumper shots like that pen did. It's still down there somewhere....LOL

Edd,

Ben V. out of date? Well, maybe my haircut. LOL

Steven,

I'd think I'd be fine with an AI peer review committee. Their definition of over-improvement on page 317 of TAORE really says nothing of any worth. I would just tell them to practice what they preach. My daughter just took AI Course 120. All examples on Page 4-18 of items of functional obsolescence are of an individual dwelling component, not a whole. All examples are of an individual dwelling component when referred to TAORE from the student manual. They also state at the top of the FO section, "This is a loss in value from defects in design." My house has no design defects. It's a fully functional 8-4-2.5 dwelling in a typically 6-3-1 dwelling neighborhood. The dwelling is fine/OK. It's the market that is rejecting it because of its location/neighborhood-OK house-wrong neighborhood.

The definition of EO in TAORE states "building components." Does that mean that EO affects ALL building components and FO only one or some building/dwelling components? Now we can fight over what is a/are component/s..cause AI has no definition of them in TAORE. LOL

My test of EO is always "text" book. So, FO goes away when you do replacement cost and should only exist if you do reproduction cost. The replacement cost and the reproduction cost were the same on my dwelling so no FO. Remember, I stated it was of standard build-nothing special. So if when I built my home, it had no FO and no PD, where does the "deminishment/loss" come from? Outside of the property, EO.

I think Arthur A. May is smiling from where ever he is. LOL.

For a funny aside, I googled to see if Boyce was still alive, cause I was going to add his name above, and I found this;

http://www.brockton.ma.us/Section_Departments/deptdocs/Assessor_FAQ.pdf

Scroll down to the bottom/last page and see what the assessor uses for a Terminolgy book....Bryl N. Boyce, SRPA, PHD and Byrl says it's EO. LOL

 

[DTB]

You are gonna love the TOTO DRAKE, just make sure no cats or small dogs walk by while you're flushing. He gone!! (Hawk Harrelson)