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Appraisal Review

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p14928

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Freshman Member
Joined
Dec 31, 2008
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General Public
State
New York
In order to develop an opinion of value in an "Appraisal Review" an Appraiser developed a "sales cost per square foot" for existing homes. He then uses this number to calculate the value of newly constructed homes. Needless to say the existing homes were older and not always the same size, type, style or construction of the new homes. Was the Appraisers approach appropriate?

A little guidance would be greatly appreciated.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
In order to develop an opinion of value in an "Appraisal Review" an Appraiser developed a "sales cost per square foot" for existing homes. He then uses this number to calculate the value of newly constructed homes. Needless to say the existing homes were older and not always the same size, type, style or construction of the new homes. Was the Appraisers approach appropriate?

A little guidance would be greatly appreciated.

I think we need to know a little bit more about the "assignment".
 

p14928

Thread Starter
Freshman Member
Joined
Dec 31, 2008
Professional Status
General Public
State
New York
Appraisal Review Assignment

The assignment was to detemine if the orignal Appraiser's appraisal of new home construction was inflated.
 

PropertyEconomics

Elite Member
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Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I assume the conclusion was that the price was inflated? Who initiated the review?
 

Jerry Bone Jr

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Joined
Feb 23, 2004
Professional Status
Licensed Appraiser
State
Oregon
In order to develop an opinion of value in an "Appraisal Review" an Appraiser developed a "sales cost per square foot" for existing homes. He then uses this number to calculate the value of newly constructed homes. Needless to say the existing homes were older and not always the same size, type, style or construction of the new homes. Was the Appraisers approach appropriate?
A little guidance would be greatly appreciated.
You're not the Review Appraiser. You're not the Appraiser. Who are you?
The three generally accepted approaches to value are the Cost, Income, & Sales.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
In order to develop an opinion of value in an "Appraisal Review" an Appraiser developed a "sales cost per square foot" for existing homes. He then uses this number to calculate the value of newly constructed homes. Needless to say the existing homes were older and not always the same size, type, style or construction of the new homes. Was the Appraisers approach appropriate?

A little guidance would be greatly appreciated.



"Sales cost per SF"...does this mean the Price/SF or the Adjusted Price/SF?
 

p14928

Thread Starter
Freshman Member
Joined
Dec 31, 2008
Professional Status
General Public
State
New York
The review was performed by a local appraiser who took interest in a public issue concerning new homes in our area and prepared an "Appraisal Review". I am trying to understand the issue and process. I do not understand how a person uses "sale price per square foot of existing homes to calculate the cost of a new home. I would assume the two ar two different animals. No? In regard to adjusted he is using "median sale price per square foot" of smaller existing homes to caalculate the value of newly constructed homes.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
The work would be suspect. Perhaps its time to have a reviewer .. review the review and the original report.
There are way too many questions that simply cannot be answered here in order to adequately answer the question you have posed.
 

p14928

Thread Starter
Freshman Member
Joined
Dec 31, 2008
Professional Status
General Public
State
New York
Thank you -- From a layman's perspecive it does not seem practical to devise a median "sales price per square foot" for older smaller existing homes (of various styles and types) and use that value to calculate the cost of larger new custom homes. The formula being used is simply as follows

("Median Sale Price per SF of Existing x SF of New = $Value of New)
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Thank you -- From a layman's perspecive it does not seem practical to devise a median "sales price per square foot" for older smaller existing homes (of various styles and types) and use that value to calculate the cost of larger new custom homes. The formula being used is simply as follows

("Median Sale Price per SF of Existing x SF of New = $Value of New)

Does the median sales price include the land?

One thing to consider and understand, the cost of something does not correlate necessarily to what it might sell for in the market.

A cost comparison of something old (depreciated) does not equal to the cost of something new (no depreciation).
 
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