Breakdown Method

[Bridgett Blankenship]

Can anyone explain the "Breakdown Method" for me?

 

[Rich Hahn]

does this relate to appraisal?
is it the cost approach?
external influences?

i give up?

more info please..

 

[Bridgett Blankenship]

Sorry for the lack of info. I'm studying for my exam and it says I need to know about "Methods of Estimated Depreciation" in the Cost Approach. Then it says:
1. Age-Life Method (Got that down)
2. Breakdown method and sequence of deductions (that's what I need help on)
3. Market extraction of depreciation (got that)

Hope this helps.

 

[Austin]

I have been in this business for 30 years and I want to hear an explanation of the breakdown method too. Maybe old Steven Santora will happen by and explain the cost approach to all of us. If you have enough data to perform the breakdown method, then you don't need the cost approach and do a limited appraisal and omit the cost approach because it becomes redundant.

 

[Bridgett Blankenship]

It seems like most of the questions on this test are a little crazy. It's things we don't really use. I'm just trying to prepare myself. I do the cost approach everyday, but I don't use the breakdown method. Beats Me!

 

[Mike Garrett RAA]

Breakdown method....Appraiser analyzes each cause of depreciation separately, measures the amount of each, and then totals the estimates to indicate a lump-sum figure that is deducted from the cost new. The proper sequence is:

Physical deterioratioin, Functional Obsolscence, and then External Obsolescence which is exactly the way it appears in the cost approach of the URAR.

 

[Rich Hahn]

looks like the 'breakdown method'
is NOT applicable.
n/a
I guess answers 1 or 3 are MORE correct

lucky its multiple choice...

good luck with the rest of the test..

 

[Restrain]

Expanded slightly further, it's physical curable (paint, carpet, etc), physical incurable (bone structure of the house), functional curable (market effect on a functional problem that can be cured economically), functional incurable (2 bedroom in a 3 bedroom market), and economic obsolescence (that's the landfill directly across the street).

Roger

 

[Bridgett Blankenship]

Excellent! Thank you everyone!

 

[Jo Ann Meyer Stratton]

I copied statements from the IAAO Property Valuation manual of 1977 over on the NAIFA forum. Take a look at that if you are interested.