Age/Depreciation Adjustments in Sales Comparison

[DMZwerg]

Now wtf does greg get me but you have a problem with it? It's simple. Some guy was getting young and illegal stuff and wrote a comment to try to back up his indiscretion. Don't accept everything you read as gospel without understanding.


Duh, nothing can be older than it actually is.

If you say it can be, provide proof or shut up. Insults dont' make your point, they make you....

Want to face me in court? I'm a nice guy on the outside

Actually I proved it a number of times. You just ignore me because I am correct and you are deliberately mixing your approaches to be trying.

You say something can't be older than it actually is? Then PROVE it! Post the actual method you use to calculate effective age for depreciation and I will show you exactly how wrong you are mathematically. Bam! There is the gauntlet slapping you in your face and thrown at your feet, now pick it up and put your money where your mouth is or leave this thread forever! :icon_mrgreen:

 

[fifteen]

You guys are defending your right to make things up in ignorance of reality??!! I think it's time for you to go if this profession is to survive. You've done enough damage

Age/life zwerg. Straight line depreciation.

 

[CANative]

Straight line. A linear approach that is simple but does not represent reality. I thought you were the champion of reality?

 

[fifteen]

Reality in a house age and effective placement is dependent on terms and assumptions. Major one being it'll exist tomorrow

I see the enemy and it is you (not personally greg) collectively. Sleazy doesn't even come close to defining the mindset here. You make me sick. This profession is done

 

[Mike Kennedy]

I see the enemy and it is you (not personally greg) collectively. Sleazy doesn't even come close to defining the mindset here. You make me sick. This profession is done

Based on that "duhpraisal" of the AF Membership AND http://appraisersforum.com/showpost.php?p=1864843&postcount=49


- feel free to pick a door, any door, and be careful not to let it hit you on your way out >>

p.s. Have a nice day.

 

[DMZwerg]

You guys are defending your right to make things up in ignorance of reality??!! I think it's time for you to go if this profession is to survive. You've done enough damage

Age/life zwerg. Straight line depreciation.

That is not numerical data. Give me the DATA you base it on. Surely you use some rule of thumb or metric other than your own imagination for determining effective age, so let's have it.

Refusal indicates you know this person with less supposed knowledge and experience than you can easily take the numbers and PROVE you wrong. Saying "age/life" is handing me a straight line, like in one of those Abbott & Costello routines, it is absolutely nothing and thus "can't be argued" so you feel safe behind that little shell.

Everyone uses a method or rule of thumb behind the scenes otherwise the number isn't supported. What is it, do you look at the actual age and remaining economic life for each individual part & piece then weigh them and come up with an effective age that way? I have seen that used before so come along, give the mathematician the numbers so he can prove you wrong using pure, cold hard numbers :laugh:

 

[CANative]

That is not numerical data. Give me the DATA you base it on. Surely you use some rule of thumb or metric other than your own imagination for determining effective age, so let's have it.

Refusal indicates you know this person with less supposed knowledge and experience than you can easily take the numbers and PROVE you wrong. Saying "age/life" is handing me a straight line, like in one of those Abbott & Costello routines, it is absolutely nothing and thus "can't be argued" so you feel safe behind that little shell.

Everyone uses a method or rule of thumb behind the scenes otherwise the number isn't supported. What is it, do you look at the actual age and remaining economic life for each individual part & piece then weigh them and come up with an effective age that way? I have seen that used before so come along, give the mathematician the numbers so he can prove you wrong using pure, cold hard numbers :laugh:

15 has admitted to using the age/life (straight line) approach. All you need to do is estimate life expectancy and divide it by the years. Average quality, Life expectancy 55 years, actual age 55 years, 100% depreciation.

 

[Hamlet]

It is painfully obvious that 15 doesn't have a clue. I say lets leave him alone to lick his wounds. After all it can't be easy being so clueless on EVERY FRIGGIN DISCUSSION ON THE AF!.:icon_mrgreen:

 

[Mr Rex]

15 needs a new avatar:

 

[George Hatch]

The M&S Depreciation section in their cost manuals lays out three approaches to depreciation:

Straight Line (age/life); a linear approach that is based on an assumption that the losses accrue in equal proportion during each period

Mid-Life theory; a curvilinear appraoch that asserts that the majority of loss occurs in the middle of the economic lifespan, with reduced rates of decline at either end

Extended life theory of loss; based on the hypothesis that buildings age much the same way people do, and that the older they get the greater is their total life expectancy.

It is this last theory that M&S bases their arbitrary economic lifespans and depreciation tables. What most appraisers who use them don't realize is that the instructions for using those lifespans and tables is very different from the manner in which their shake-n-bake appraisal courses taught them about depreciation.

The Age/Life (linear) method of depreciation uses the following equation:

Economic lifespan
- Eff. Age** This being the element that is estimated by the "valuer"
Remaining economic life

But that's not the formula the M&S tables were intended to be used with. Their formula is different:

Economic lifespan
- Remaining Econ. Life** This being the element that is estimated by the "valuer"
Effective Age for depreciation purposes

This latter application involves more than mere physical condition, but also takes into account the external factors that contribute to feasibility and HBU. These factors figure in to circumstances such as the 100yr old SFR in poor condition still having contributory value even though its physical age and condition surpass the "Economic Lifespan" of 55 years. It also explains how a 10-yr old casino with 5,000 rooms on the Las Vegas strip is at the end of its economic lifespan even though it's still in good physical condition.

The analysis is based on the relationships and interactions on both an internal and external basis, not just on internal factors in the abstract and without context. This is why a 50-year old house may be halfway through it's economic life in one neighborhood and past its end in another.

If I roll into a tract of homes built during the 1950s, average quality and average condition overall, I'm usually not going to see any redevelopment activity going on even though those structures are all past any arbitrary expiration date. What I'm going to ask myself is "given the current environment, how long do I think these structures will continue to contribute to the value of the whole?" The answer to that could easily be - depending on what I can see - in excess of 30 years, which would put those structures at only the midpoint of their economic lifespans, worthy of a depreciation rate not exceeding 50% and most likely less than that. Using the M&S table their calculation in that scenario is only 36%.

If I actually do find site sales data from neighborhoods with similar economic trends then that obviously contributes to the quality of my analysis and the reliability of the results. Even if those site sales aren't located in the subject neighborhood itself.