Extraction Method

[CANative]

If you've accounted for every nuance accurately, they do. Problem is that we cannot account for every nuance accurately, thus the 'adjusted' range of value. Same with comparing the two approaches - the reason they end up different is that we're not able to capture every facet accurately.

Exactly. That's why we reconcile rather throw an approach over the side.

 

[Zephyr999]

They didn't actually drink Kool-Aid. They drank Flavor-Aid. So even that bit of name calling is predicated on inaccurate information.

What? Lost me there on Flavor-aid...or I'm dating myself LOL

 

[alebrewer]

Exactly. That's why we reconcile rather throw an approach over the side.

There are (per USPAP S1-6) two segments of potential reconciliation. Reconciliation within the approach(es) and reconciliation OF the approaches. For me, reconciliation OF the approaches is fairly simple, as I don't have to reconcile the cost approach. I do, however, frequently perform the income approach on SF properties, and in those cases I would have to perform reconciliation OF the approaches...

 

[CANative]

Flavor-Aid was a cheap knock off (if .10¢ is that much cheaper than .15¢) of Kool-Aid. Jim Jones used Flavor-Aid at Jonestown.

 

[CANative]

There are (per USPAP S1-6) two segments of potential reconciliation. Reconciliation within the approach(es) and reconciliation OF the approaches. For me, reconciliation OF the approaches is fairly simple, as I don't have to reconcile the cost approach. I do, however, frequently perform the income approach on SF properties, and in those cases I would have to perform reconciliation OF the approaches...

What appraisers are arguing is that it shaves off production time to exclude an applicable approach. In the olden days that resulted in a limited appraisal and required a label and I think an explanation. Do you explain that you didn't complete the CA because it takes longer than needed? Or would that sound wishy-washy?

 

[alebrewer]

What appraisers are arguing is that it shaves off production time to exclude an applicable approach. In the olden days that resulted in a limited appraisal and required a label and I think an explanation. Do you explain that you didn't complete the CA because it takes longer than needed? Or would that sound wishy-washy?

I just don't understand why you persist in projecting what you think I might be saying. A more professional question would have been, "What is your explanation for why you don't complete the cost approach?" This passive-aggressive behavior is just childish, CANative.

And to your question, as I've already stated, I say that I don't complete the cost approach because I don't believe it is necessary for credible results. Does that sound wishy washy?

Also - what appraisers are arguing that it shaves off production time to exclude an applicable approach? You're making unsubstantiated assertions unless you provide documentation of your assertion.

 

[Zephyr999]

Flavor-Aid was a cheap knock off (if .10¢ is that much cheaper than .15¢) of Kool-Aid. Jim Jones used Flavor-Aid at Jonestown.

Yup...definitely dating myself then. Sigh...

 

[Zephyr999]

I just don't understand why you persist in projecting what you think I might be saying. A more professional question would have been, "What is your explanation for why you don't complete the cost approach?" This passive-aggressive behavior is just childish, CANative.

And to your question, as I've already stated, I say that I don't complete the cost approach because I don't believe it is necessary for credible results. Does that sound wishy washy?

Also - what appraisers are arguing that it shaves off production time to exclude an applicable approach? You're making unsubstantiated assertions unless you provide documentation of your assertion.

This would be termed...lower standards, not a valid reason for exclusion.

 

[alebrewer]

This would be termed...lower standards, not a valid reason for exclusion.

what would be termed lower standards? Have you even read the Scope of Work Rule? It just makes me laugh the way some folks throw around accusations as if they are facts. I can assure you I don't have low standards. Per the Scope of Work Rule, "The scope of work must include the research and analyses that are necessary to develop credible assignment results." Not sure how up to speed you are on your USPAP, but do you know who is responsible for determining the scope of work?

 

[Michigan CG]

For the record, here is what I really am saying: "And to clarify, IF: (a) the appraiser has an accurate assessment of site value, (b) an accurate assessment of RCN, (c) an accurate assessment of accrued depreciation from all forms (P,F,E), and (d) an accurate assessment of the contributory value of the site improvements, then I'll grant that the cost approach MIGHT return a meaningful estimate of market value.

The appraiser gets his accurate assessment of site value from sales of comparable properties.
The appraiser gets his accurate assessment of RCN from Cost Comparables or a cost source.
The appraiser uses sold sales to determine accrued appreciation from all forms and the same with site improvements.

All three approaches to value intertwine. Those matched pairs that everyone claims grow on trees are a function of cost, more specifically depreciated cost. When an appraiser gives a $5,000 adjustment for a bathroom and the bathroom would cost $12,000 NEW that is depreciated cost and can be derived from the cost approach.

When doing agricultural appraisals where there are improvements it is typical for the cost approach to be heavily involved. Looking at residential properties that are complex with say equestrian facilities the cost approach is a big part of those appraisals.

I have found over the years that those that discount (no pun intended) the cost approach are those that do not understand it.