"as-is" Value Of Site Improvements

[CANative]

The problem I see from your side is the definition of "site". I understand the definition of "site". Whoever developed the form had to want the differences between the land sales by comparison or whatever method was developed listed on "as is" value of site improvements. The term "site" should not be at the top line. "Land" should be in it's place, or some other term to reference what land improvements are included and what is not.

That's why I said the problem was the stupid form. Although a good appraiser should be able to figure it out and work around. That is if the appraiser is not doing the "5 minute cost approach." Now that I do so much work that depends on the income approach I can re-iterate my earlier (long time ago) statement that the CA is by far the most difficult approach.

 

[Eli]

That's why I said the problem was the stupid form. Although a good appraiser should be able to figure it out and work around. That is if the appraiser is not doing the "5 minute cost approach." Now that I do so much work that depends on the income approach I can re-iterate my earlier (long time ago) statement that the CA is by far the most difficult approach.

I agree, but I am a rare bird that likes it though. It forces a serious look at land value "as if vacant", replacement/reproduction costs, and depreciation from all sources, and can really keep one from messing up in the other approaches in some cases. I agree with you that it is hard and takes a bunch of time to do right.

 

[gregb]

I have one client who only requires the Cost Approach when the improvements were built prior to 1940.

 

[hastalavista]

The top part of the fannie mae cost approach (and above that the narrative comment section for site value) is asking for our opinion of value of the subject's site. It's not asking for the value of the land. That should include any site improvements... yes?

No.

The cost approach values the site as-if vacant and ready for development. Not improved except for the main building.

 

[Gobears81]

I agree, but I am a rare bird that likes it though. It forces a serious look at land value "as if vacant", replacement/reproduction costs, and depreciation from all sources, and can really keep one from messing up in the other approaches in some cases. I agree with you that it is hard and takes a bunch of time to do right.

I quite enjoy it also and for whatever reason, I usually feel like I do a good job on the appraisal if the cost approach is included, which is flawed logic. Problem for commercial properties is that it is usually the least likely of the three approaches to suggest a correct value, as there might either be huge EI/ premium for leasing up, or it might suggest a value that is quite a bit higher than the other two approaches, even after accounting for functional/ economic obsolescence.

 

[CANative]

No.

The cost approach values the site as-if vacant and ready for development. Not improved except for the main building.

A real cost approach might do that. We're talking about a Fannie Mae cost approach and the value they're after is site value, not land value. Sez so on the form and the selling guide doesn't say anything different. I just looked it up.

 

[CANative]

I quite enjoy it also and for whatever reason, I usually feel like I do a good job on the appraisal if the cost approach is included, which is flawed logic. Problem for commercial properties is that it is usually the least likely of the three approaches to suggest a correct value, as there might either be huge EI/ premium for leasing up, or it might suggest a value that is quite a bit higher than the other two approaches, even after accounting for functional/ economic obsolescence.

When I do gas station/c-stores for appealing taxes the only approach the assessor's appraiser is interested in is the cost approach.

 

[hastalavista]

A real cost approach might do that. We're talking about a Fannie Mae cost approach and the value they're after is site value, not land value. Sez so on the form and the selling guide doesn't say anything different. I just looked it up.

Since when are you a slave to the form? (answer: never)

So, why not do it the "real way"?

Seems to me you don't let the form drive your H&BU analysis.

 

[CANative]

D'oh! now you're grumpy. That's what you get for hanging out with Klahr.

I'm not a slave to the form but we're talking about the form. I say it is flawed.

 

[Terrel L. Shields]

A real cost approach might do that. We're talking about a Fannie Mae cost approach

Ahh, yes... there is a difference. MH + Land + "Site Improvement"