2055 refi

[Salty]

You would just use the same assumptions about the subject that you would in the SCA

Yeah - not me. One cannot derive a credible cost approach without setting foot in the property IMO. I don't ever recall being asked to complete CA on a 2055. I get the thought that since you are doing a 2055 anyway you can make the assumptions for the cost, but to me the CA is so much more in-depth and requires a greater degree of analysis that just can't be relied upon from looking at the outside. Of course, I suppose one can make the same conclusion about the entire 2055 itself. I suppose of it was cookie-cutterville.

 

[Terrel L. Shields]

the same assumptions about the subject that you would in the SCA

The demands of the 2055 is to have a reliable source of information about the interior - prior MLS, recent appraisal, personal communication...etc. So the only assumption you really need in a 2055 report is that you assume the information provided remains valid and accurate as of the date of appraisal.

 

[alebrewer]

Yeah - not me. One cannot derive a credible cost approach without setting foot in the property IMO. I don't ever recall being asked to complete CA on a 2055. I get the thought that since you are doing a 2055 anyway you can make the assumptions for the cost, but to me the CA is so much more in-depth and requires a greater degree of analysis that just can't be relied upon from looking at the outside. Of course, I suppose one can make the same conclusion about the entire 2055 itself. I suppose of it was cookie-cutterville.

Why would the CA require a greater level of assumptions about property condition than would the SCA?

 

[Lee Lansford ASA]

Cost approach on a 2055??? Uhhh how? I wouldn't go near that.

If an appraiser can produce a credible Sales Comparison Approach, that appraiser should be able develop a credible Cost Approach.

 

[Tom4value]

I received an order for a 2055 conventional refi. The engagement indicates that this client requires a replacement cost estimate to be included. I have never seen this before. What does this entail?

That is code for, “just make something up that we can work with”.

There is no way I am doing a cost approach without enough informaction.

 

[Terrel L. Shields]

There is no way I am doing a cost approach without enough informaction

There is no way to complete the 2055 within the required scope of work as stated in the form without having sufficient information to do both. Why would you need to see inside? You have information on the interior, or you cannot complete the form without violating the SOW requirements of the form. It is not sufficient to simply caveat away the information and "assume" the interior is similar condition as the exterior. Someone has to describe the interior to you.

I mean, I do a cost break down on every Comparables write-up I do. No step for a stepper.

 

[David S]

Cost approach on a 2055??? Uhhh how? I wouldn't go near that.

Some AMC want me to complete cost approach on a 2055. I just use public record for the lot site and GLA to complete that section. The effective age is adjusted by actual age, street inspection impression and last resale MLS pictures if it was recent a few years. The only issue will be garage sq ft which I can't go inside physically measure it. Sometime it will be on public record, like city / county websites. If not, I just assume 200 sq ft per car parking space.

 

[sputnam]

How is it that you think you have enough info to complete Sales Comparison Analysis but, not enough to complete the Cost Approach?

 

[Tom D]

I mean, I do a cost break down on every Comparables write-up I do. No step for a stepper.

Sitting in my lawn chair enjoying the cooler weather. I can do that because i never do the cost approach, and really never asked to do. I don't think my value is less believable than yours with a cost approach. But i speak from big easy urban life, lucky me.

I am also now doing fix and flips again. I don't think most of you are cost experts as you believe you are. I do believe my cost experts that i pay $750 to do a cost breakdown on a rehab. Now they are always right, better than some contractors. A lot of contractors get it wrong. And yous think your 1004 cost approach is beautiful. We have the uspapers, the 1/10ers, and the costers now. Not that you aren't such, but i prefer my no cost, no state problem. These comments only refer to residential work.

 

[Terrel L. Shields]

I don't think most of you are cost experts as you believe you are.

When I have tons of new construction on lots which sold last year, I have a pretty good idea of what the cost - including site features and EP are. Pretty easy. When lots in a small town are selling for $30k each and Horton just built 22 houses selling between $285k-$325, I think I have a pretty good idea what "costs" are. I am working on a commercial building that is being renovated. How do you justify the 'as is' and 'as proposed' values without considering costs involved as well as plans? And, how do you do a new mini-warehouse without considering all three, income, costs and sales? So, how many $350 cookie cutters do you need to add up to a commercial fee? Or, even the fee I get for one rural property?

A poorly done CA is no better than the poorly done SA. And, don't get me started on income. When one-third the housing in the US is rented, the bland statement about the area is all "owner-occupied" falls flat of the truth.