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Appraised value different from sales comparison value.
- Thread starter mjcrodgers
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Mr Rex
Elite Member
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- Jan 12, 2004
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- Certified Residential Appraiser
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- North Carolina
Where does "it" say that?
The "back in to value" approach?
It's good to keep "providers" happy when we are nothing but lowly "appraiser technicians."
Maybe you should introduce him to a guy named Steve
.
Mile High Trout
Elite Member
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- Feb 13, 2008
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- Colorado
Do not back into your approach
If the market is in fluctuation, where do you attribute the valuation differences, if not land? Adjusting the land is not backing into the approach, if you have the cost to build psf figures developed properly. To adjust the land is the appropriate way to adjust these figures. If the neighborhood appeal is rising, so is the land value, if the neighborhood is crashing, so is the land value. How would this be backing into the cost approach? To adjust building costs would be more indicative of backing into the cost approach. You are not making any sense. To call me an appraiser technician, when you obviously missed the point of my lecture is curt sir! It demonstrates your lack of seriousness to subjective opinions that have merit, you will never get. An appraiser who is not willing to learn, & consider new ideas, is not part of the solution. Besides this comes straight from the top, so .........
Re think it, then get back to me. My comment was on the function of different approaches to value, and the reconcilliation of those values through appropriate appraisal methods. I did not mention backing into anything, but thanks for assuming that!
m2:
If the market is in fluctuation, where do you attribute the valuation differences, if not land? Adjusting the land is not backing into the approach, if you have the cost to build psf figures developed properly. To adjust the land is the appropriate way to adjust these figures. If the neighborhood appeal is rising, so is the land value, if the neighborhood is crashing, so is the land value. How would this be backing into the cost approach? To adjust building costs would be more indicative of backing into the cost approach. You are not making any sense. To call me an appraiser technician, when you obviously missed the point of my lecture is curt sir! It demonstrates your lack of seriousness to subjective opinions that have merit, you will never get. An appraiser who is not willing to learn, & consider new ideas, is not part of the solution. Besides this comes straight from the top, so .........
Re think it, then get back to me. My comment was on the function of different approaches to value, and the reconcilliation of those values through appropriate appraisal methods. I did not mention backing into anything, but thanks for assuming that!
m2:
CANative
Elite Member
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- Jun 18, 2003
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- Retired Appraiser
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- California
I didn't call you an appraiser technician. That is what "providers" call us.
Straight from the top? Top of what?
Tweeking land value in the cost approach so that it matches the sales approach is backing into the cost approach.
Straight from the top? Top of what?
Tweeking land value in the cost approach so that it matches the sales approach is backing into the cost approach.
Mile High Trout
Elite Member
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- Feb 13, 2008
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- Certified Residential Appraiser
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Look, you are not getting it
You can tweak the land value, to match the market approach. The point of a cost approach is to develop a credible opinion of value, and break down that value rationally. To adjust the value to become more aligned with the market approach is not unethical, or an unprofessional move. You are putting to much into this " back into the cost approach" thinking. You are downing my opinion, without offering any credible alternative methods. An alarmist attitude at best. The cost approach helps draw benchmarks for land vs home valuation for each specific assignment. What should your benchmark be for land, if not a market derived value? How does this affect the current market valuations? To adjust the land value is appropriate, to some extent. One poster implied that you should adjust your land value to less than 0. This does not seem rational. If neighborhood values continue to drop, land could be mostly worthless, but will always maintain a certain percentage of value. Should the cost approach be substantially higher than the market approach, you know the homes there are selling for much less than "NATIONAL AVERAGES", which is what the cost approach gives you, with a subjective land valuation alongside. In the case where land would have to be adjusted to 0, to match the market approach, the market is obviously in severe distress, and the two approaches should differ on the report, with a comment explaining how the market here falls below national trends, and established benchmarks for typicall building pricing. Investors beware!
It seems like you are still in appraisal 101. Do you need me to spell it out any more clearly?
You can tweak the land value, to match the market approach. The point of a cost approach is to develop a credible opinion of value, and break down that value rationally. To adjust the value to become more aligned with the market approach is not unethical, or an unprofessional move. You are putting to much into this " back into the cost approach" thinking. You are downing my opinion, without offering any credible alternative methods. An alarmist attitude at best. The cost approach helps draw benchmarks for land vs home valuation for each specific assignment. What should your benchmark be for land, if not a market derived value? How does this affect the current market valuations? To adjust the land value is appropriate, to some extent. One poster implied that you should adjust your land value to less than 0. This does not seem rational. If neighborhood values continue to drop, land could be mostly worthless, but will always maintain a certain percentage of value. Should the cost approach be substantially higher than the market approach, you know the homes there are selling for much less than "NATIONAL AVERAGES", which is what the cost approach gives you, with a subjective land valuation alongside. In the case where land would have to be adjusted to 0, to match the market approach, the market is obviously in severe distress, and the two approaches should differ on the report, with a comment explaining how the market here falls below national trends, and established benchmarks for typicall building pricing. Investors beware!
It seems like you are still in appraisal 101. Do you need me to spell it out any more clearly?
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Riick
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- Delaware
FWIW .. I remember doing an appraisal with negative value.So, only the land value fluctuates. So in some cases, land has value less than zero? Interesting. Learn something new everyday.
Lot was worth $250- $500, but the structure was so bad, it needed demolition.
Mile High Trout
Elite Member
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- Feb 13, 2008
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- Certified Residential Appraiser
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- Colorado
straight from the top
Meaning:
One of the state appointed board members educated me on this cost approach way of thinking. It is part of Colorado's new initiative to increase appraisal integrity, & appraisal education. In this case "straight from the top" means that Harold Oszowitz, from the American Real Estate College, also a member of the state board, and a current USPAP reviewer for certified applicants, spent some time with me, talking about the different approaches to valuation, & the according uses & functions. I'm going to count on his 30 years of experience in this matter. Your opinions regarding my opinion being not so credible, does not seem based on any facts.
Now work with me, I'm more than happy to debate the issue, but I'm not quite sure why your disagreeing with me.
Meaning:
One of the state appointed board members educated me on this cost approach way of thinking. It is part of Colorado's new initiative to increase appraisal integrity, & appraisal education. In this case "straight from the top" means that Harold Oszowitz, from the American Real Estate College, also a member of the state board, and a current USPAP reviewer for certified applicants, spent some time with me, talking about the different approaches to valuation, & the according uses & functions. I'm going to count on his 30 years of experience in this matter. Your opinions regarding my opinion being not so credible, does not seem based on any facts.
Now work with me, I'm more than happy to debate the issue, but I'm not quite sure why your disagreeing with me.
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