Cost Approach vs Value Opinion

[CANative]

Is that a difference with a meaningful distinction in the context of what analysis is required to answer the question "yes" or "no" on the form? :new_smile-l:

Only so far as being or not being "in compliance with USPAP." You've seen my reports and I've seen your reports. We're both on the same page. We both report an opinion of the "as if" vacant HBU. But we're exceeding the minimum.

On the OPs topic I wonder if the HBU "as if vacant" should be "hold until market conditions improve." That would be the logical conclusion if we're thinking the EI is the problem between the SA and the CA. But the house got built.

 

[hastalavista]

Only so far as being or not being "in compliance with USPAP." You've seen my reports and I've seen your reports. We're both on the same page. We both report an opinion of the "as if" vacant HBU. But we're exceeding the minimum.

Maybe... but I'm not convinced we are.

On the OPs topic I wonder if the HBU "as if vacant" should be "hold until market conditions improve." That would be the logical conclusion if we're thinking the EI is the problem between the SA and the CA.

We agree; this is the point of my post #27.

But the house got built.

And builders go bust when it costs them more to build than what they can sell the finished product for.

That is why an outcome of Cost exceeding Value for a new home in a challenged economic environment shouldn't be surprising to us or to a lender.

 

[hastalavista]

Not to belabor the point/argument about developing a H&BU as-vacant for all GSE assignments, but....

When completing the cost approach, how can one avoid a H&BU as-vacant of the subject's site?
Without completing that analysis, how does one figure out which comparables to use in developing an opinion of site value for the subject? :mellow:

 

[Lee Lansford]

Not to belabor the point/argument about developing a H&BU as-vacant for all GSE assignments, but....

When completing the cost approach, how can one avoid a H&BU as-vacant of the subject's site?
Without completing that analysis, how does one figure out which comparables to use in developing an opinion of site value for the subject? :mellow:

I don't know how one might argue against your assertion.

Someone disagrees?

 

[ucbruin]

I don't know how one might argue against your assertion.

Someone disagrees?

Percentagewise, how much of your time is spent on Sales Comparison vs Cost Approach? 75% vs 25%, 90% vs 10%, 10% vs 90%, etc.

 

[ucbruin]

Not to belabor the point/argument about developing a H&BU as-vacant for all GSE assignments, but....

When completing the cost approach, how can one avoid a H&BU as-vacant of the subject's site?
Without completing that analysis, how does one figure out which comparables to use in developing an opinion of site value for the subject? :mellow:

Do you complete the Cost Approach before you complete the Sales Comparison Approach?

 

[Lee Lansford]

Percentagewise, how much of your time is spent on Sales Comparison vs Cost Approach? 75% vs 25%, 90% vs 10%, 10% vs 90%, etc.

In general?

Much, much more time re: SCA.

But, that does not change anything specific to the need for H&B Use analysis.

 

[ucbruin]

In general?

Much, much more time re: SCA.

But, that does not change anything specific to the need for H&B Use analysis.

I agree that the lion's share of time is spent on Sales Comparison. In the real world of everyday typical 1004 appraisal I would imagine that H&B Use analysis is given about 0% time.

 

[Lee Lansford]

...

...In the real world of everyday typical 1004 appraisal I would imagine that H&B Use analysis is given about 0% time.

Yes, and every once in a while I see one of those appraisal reports where it is evident that the appraiser was clueless about this fundamental of appraising.

 

[Michigan CG]

Percentagewise, how much of your time is spent on Sales Comparison vs Cost Approach? 75% vs 25%, 90% vs 10%, 10% vs 90%, etc.

Two weeks ago I based my opinion of value on the Cost Approach and pretty much ignored the SCA.