Site Value

[Overimprovement]

that would probably be client and price dependent. good client, decent fee, yes i would do it. part-time client (meaning not sending me a consistent amount of orders) or a fee on my low end, maybe not. yes it entails a little more work but like most appraisers (i believe) i have a cache of land sales in all the areas i cover so i am searching my own database, not MLS or realist hoping to find land sales - i have them already.

in your case they came to you after the report was completed with the request to add the second parcel so i would probably hit them up for a small additional fee, say maybe $100, to cover my time. if they balk then let them know you would be happy to provide a new report with new effective and signature dates including both parcels but the fee will be [normal fee + whatever you want to add on]. since they will be paying this out of their pocket most likely they will opt for the $100 additional fee.



you are not completing two appraisals per-say, you are completing two different approaches to value (and for our purposes there are three total) for one appraisal. do you charge extra if you complete the income approach on an appraisal?

I've never charged any extra for other approaches, no. And in a market where no one else does either (that I am aware) I guess I won't be starting either. The income approach on a 1004 form is basically just inserting the GRM (like land sales, usually from my personal cache) times rental. Now I do charge more, as all do, for a 1007, which is significantly more work than a GRM.

While you are correct on the approaches to value, my point I guess is that since the cost approach (esp. site value) CAN take quite a bit of time if done properly, I guess I am just curious why its never been something that we charge more for. I know sometimes we don't know if it will be needed, but we usually do on basic residential lender uses--if the subject is newer and/or it is part of SOW/assignment conditions.

As an example, If I KNOW two active comps are required in a report for a particular client, I do charge more for that than without that requirement. Its a tangible thing that I have a good idea how much extra time it will take. Same with the 1004MC form. Doesn't mean the legwork isn't there to determine market conditions if I do not include it, but the appraisal is one thing, the report is another.

I know we all quote our own fees and all, but the reality is the market does set some upper and lower bounds for much of this stuff. We either play within those bounds or simply do not get much, if any, work.

 

[hastalavista]

I know we all quote our own fees and all, but the reality is the market does set some upper and lower bounds for much of this stuff. We either play within those bounds or simply do not get much, if any, work.

(my bold)

Very true... but I will amend it to say "....simply do not get much, if any work, from certain clients."

My experience is this: Those clients that expect the Income or Cost Approach to be completed correctly are willing to pay a premium for having those approaches done correctly. As you point out, the sky isn't the limit, but some will pay for the extra work.
For those clients who do not expect the Income or Cost Approach to be completed correctly, then they may not care if it is done correctly and won't pay more for having it done correctly. They get what they pay for.

Of course, there are some clients (like yours for the jobs that you do) that get it done correctly at no significant premium. If there are enough appraisers like you (who do the approaches correctly and completely) on their approved panel, then they are getting what they expect and paying what the group is willing to charge them.

 

[TRESinc]

I've never charged any extra for other approaches, no. And in a market where no one else does either (that I am aware) I guess I won't be starting either. The income approach on a 1004 form is basically just inserting the GRM (like land sales, usually from my personal cache) times rental. Now I do charge more, as all do, for a 1007, which is significantly more work than a GRM.

While you are correct on the approaches to value, my point I guess is that since the cost approach (esp. site value) CAN take quite a bit of time if done properly, I guess I am just curious why its never been something that we charge more for. I know sometimes we don't know if it will be needed, but we usually do on basic residential lender uses--if the subject is newer and/or it is part of SOW/assignment conditions.

As an example, If I KNOW two active comps are required in a report for a particular client, I do charge more for that than without that requirement. Its a tangible thing that I have a good idea how much extra time it will take. Same with the 1004MC form. Doesn't mean the legwork isn't there to determine market conditions if I do not include it, but the appraisal is one thing, the report is another.

I know we all quote our own fees and all, but the reality is the market does set some upper and lower bounds for much of this stuff. We either play within those bounds or simply do not get much, if any, work.

i hear you and know where you are coming from. i know am not the norm but the clients i have that do residential lending all have basically the same requirement - the cost approach is only mandatory when the subject is new construction; if not then it is left up to the appraiser to determine if the cost approach is needed to achieve credible results. all my lending clients pay a little more (to me at least) for new construction appraisals but i place the blame on the builders and the extra hassles they cause in the appraisal process, not completing the cost approach (which is similar to your clients requiring two listings i guess).

 

[George Hatch]

It's strictly business. More work will usually justify more fee, but that doesn't mean every client is going to be willing to pay.

If I'm appraising proposed construction I include a complete Cost Approach with gridded site sales data, 'cause that's how I set that up in my forms. Apart from that I'm more likely to include site sales when I have significant adjustments to make for lot sizes, such as with the 30-acre SFR+equestrian facility I appraised last week,.

 

[Vermonter]

the cost approach is only mandatory when the subject is new construction; if not then it is left up to the appraiser to determine if the cost approach is needed to achieve credible results.

Cost approach relevant/required or not, my clients all still require an opinion of site value. I've even had it required on leasehold assignments.

 

[TRESinc]

Cost approach relevant/required or not, my clients all still require an opinion of site value. I've even had it required on leasehold assignments.

different strokes for different folks maybe it's a vermont thing. unfortunately none of us are as lucky as djd says he is, because none of his clients have any requirements on their orders. they just give him the address and let him do whatever he wants according to his posts.

 

[Overimprovement]

Cost approach relevant/required or not, my clients all still require an opinion of site value. I've even had it required on leasehold assignments.

Most of my AMC clients are the same--and that's the bulk of the work on the CA, for me anyway. Only one of my local lenders asks for site value.

 

[bnmappraisal]

But it got me to thinking. When we do the cost approach on the regular 1004 form, we are to develop site value, using as one potential method the sales comp approach of similar site sales and making adjustments.

That is basically a land appraisal, right? Reported on a 1065. So my question--when you include the cost approach on a 1004, are you doing the same amount of work as you do for a 1065?

(my bold) I think many on the RES MTG lending side don't look at it that way because I (personal opinion) think many just back into it or use County Assessor #'s

 

[bnmappraisal]

When I do the cost approach, yes, I research and provide land sales (if available... and some usually are... even in parts of San Francisco) to support the site value.
The analysis is the same; however, the discussion does not have to be the same as found in a stand-alone land appraisal. I have no problem describing the sales (site size, date of sale, price, zoning) and narrating the differences (superior in location, view, inferior in whatever) and concluding my opinion of site value to be used in the cost approach.

That's what I do for a residential report for mortgage-lending purposes.

I will admit, it was only "recently" (probably the last ~2 years +/-) that I actually started placing any land sales in my CA section of the 1004 form. And that came as a result of reading comments on this forum, similar to Denis's above!

Generally I give MLS#, sold date (sometimes use actives/pendings depending on availability of sold), price and lot size. Sometimes I mention location (equal/sup/inf) but not always.