Sales Comparison Grid & Cost to Cure

[TekJ42]

Actually, I changed the subject's condition rating and modified the condition adjustment for all comparables with some very specific language in the addendum. As of the effective date the subject had no roof covering - so we adjusted the condition as though the subject's roof was severely damaged. Feels more correct than a cost derived adjustment jammed into a line item in the sales grid. They seem to have bought it for now... tomorrow is another day though.

But the subject roof is not severely damaged. It is misleading to present it as such. ( AS IF)- you made a HC without declaring it a HC.

The subject roof is covered with tar paper over wood ( or whatever is there ) and ready for tiles to be installed.

If the cost to install the tiles was a substantial enough amount to impact value you could have told the client you intend to put a market-derived adjustment instead of straight cost and they would have said ye ( because they can not instruct you how to write your appraisal )

AS IS means AS IS !! Why is that difficult...It does not mean AS IF it had ( severe roof damage or X other )

The as is condition of the roof is not finished, but not completely missing. Partially installed is more similar to severely damaged than it is to finished or completely missing. If the client insists on an adjustment in the sales grid (instead of just commentary in the addendum), then isn't it more accurate to assume (HC) that the current condition of the roof negatively influences the overall condition of the subject than to use a cost based adjustment in a market based approach?

Its almost comical how different actual industry practice seems to be than what QE and National Test standards drilled into my head for literally hundreds of hours.

 

[TekJ42]

25. Any intentional or negligent misrepresentation(s) contained in this appraisal report may result in civil liability and/orcriminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United StatesCode, Section 1001, et seq., or similar state laws.

They seem to have bought it for now ?? Seriously??? You sound like a nice guy, but your view point is a bit off -

As if the roof was severely damaged is misleading because it is not the case and you adjusted based on it, ( that I swh I pasted cert 25). It is good for any of us to slow down and read the certs and limiting conditions - a house with severe roof damage is usually compromised in other ways , water intrusion or mold, and the roof needs repair and replacement - this is a roof ready to be tiled. Normally roofing companies would put a tarp on overnight to protect against weather -

You still haven't answered my question. Do you use cost based adjustments in market based approaches?

 

[J Grant]

You still haven't answered my question. Do you use cost based adjustments in market based approaches?

I only use it when it makes sense that the C2C is also how a buyer would react - a minor amount to complete a repair or replace. Taht amount is considered too minor to materially affect value.

If the repair or replace is substantial enough to materially affect value, then I would not use a cost-based adjustment.

For example, 5k to finish tiling a bath in an 800k house would not affect my value opinion and an informed buyer would know this is a minor amount. I use no adjustment and explain and put in a cost estimate in commentary, though in some cases I might put the cost to cure on the grid and explain the value impact was negligible.

if however an entire bath needed to be replaced at a cost of 20k in a 400k house that would impact value IMO to the degree I would not use a cost as the adjustment and would instead look for market reaction to equivalent value repair issues -

 

[TekJ42]

I only use it when it makes sense that the C2C is also how a buyer would react - a minor amount to complete a repair or replace. Taht amount is considered too minor to materially affect value.

If the repair or replace is substantial enough to materially affect value, then I would not use a cost-based adjustment.

For example, 5k to finish tiling a bath in an 800k house would not affect my value opinion and an informed buyer would know this is a minor amount. I use no adjustment and explain and put in a cost estimate in commentary, though in some cases I might put the cost to cure on the grid and explain the value impact was negligible.

if however an entire bath needed to be replaced at a cost of 20k in a 400k house that would impact value IMO to the degree I would not use a cost as the adjustment and would instead look for market reaction to equivalent value repair issues -

So yes - you would use a cost based adjustment in a market based approach. Thank you.

 

[J Grant]

The as is condition of the roof is not finished, but not completely missing. Partially installed is more similar to severely damaged than it is to finished or completely missing. If the client insists on an adjustment in the sales grid (instead of just commentary in the addendum), then isn't it more accurate to assume (HC) that the current condition of the roof negatively influences the overall condition of the subject than to use a cost based adjustment in a market based approach?

Its almost comical how different actual industry practice seems to be than what QE and National Test standards drilled into my head for literally hundreds of hours.

Imo you made up that a roof ready for the tile and needing it installed is similar to a roof that is severely damaged.

The roof is not "completely missing " it has a wood or other surface. correct ? completely missing means open frame or nothing. A decent contractor would cover a roof that just needs the tile installed with a tarp. .

A house with a severely damage roof can mean a hole in the roof, the roof partly caved in etc and often sees water intrusion or other issues.

 

[J Grant]

So yes - you would use a cost based adjustment in a market based approach. Thank you.

I explained the limited circumstances where I would do it.

I do it when it would mean the cost to cure would be the same as an informed buyer would consider since the amount is too minor to impact total value so it is still a market based approach.

 

[TekJ42]

Imo you made up that a roof ready for the tile and needing it installed is similar to a roof that is severely damaged.

The roof is not "completely missing " it has a wood or other surface. correct ? completely missing means open frame or nothing. A decent contractor would cover a roof that just needs the tile installed with a tarp. .

A house with a severely damage roof can mean a hole in the roof, the roof partly caved in etc and often sees water intrusion or other issues.

"... or otherwise contributed to the overall condition of the property in a manner that is consistent with a general C4 condition. The use of this hypothetical condition influenced assignment results. This statement is included for compliance with USPAP."

 

[J Grant]

"... or otherwise contributed to the overall condition of the property in a manner that is consistent with a general C4 condition. The use of this hypothetical condition influenced assignment results. This statement is included for compliance with USPAP."

Sorry this seems to be a a CYA statement but just makes things worse -


AS IS means that there is NO hypothetical condition. Why do you still not understand that ? Not trying to be mean- but making a HC negates it being AS IS. Understanding that can prevent future problems

 

[TekJ42]

I explained the limited circumstances where I would do it.

I do it when it would mean the cost to cure would be the same as an informed buyer would consider since the amount is too minor to impact total value so it is still a market based approach.

Seems reasonable - and what about when the client insists that you add the adjustment to the sales grid regardless of whether you feel the "...cost to cure would be the same as an informed buyer would consider since the amount is too minor to impact total value..." ? Would you apply a cost based adjustment to the sales grid if they absolutely insisted, or would you find another way to account for the discrepancy to fulfill an assignment condition?

 

[J Grant]

Seems reasonable - and what about when the client insists that you add the adjustment to the sales grid regardless of whether you feel the "...cost to cure would be the same as an informed buyer would consider since the amount is too minor to impact total value..." ? Would you apply a cost based adjustment to the sales grid if they absolutely insisted, or would you find another way to account for the discrepancy to fulfill an assignment condition?

I do not let a client instruct me or insist - believe me, I make those C 2 C adjustments on my own - before the client gets the appraisal report

If a client insisted, I would carefully think if it is something I can credibly do and do it because I believe it is a credible approach -and consistent with how an informed buyer would react. In this case you screwed up the first time and the client perhaps if offering a way to make it an AS IS appraisal, and you keep overcomplicating it by making a new assumption about a severely damaged roof. or putting in language about an HC.