Charge For Single-family New Construction

[CVal]

Hello,

I'm appraising single family proposed construction. What are some of you charging and does that include the cost approach?

I'm in an active new construction market, so thought that cost approach could be excluded in some cases. FNMA also states that its not required.

Thanks for any replies.

 

[gregb]

While FM may not require the Cost Approach, the USPAP requires the appraiser to develop and report the result of any approach to value that is necessary for credible assignment results. Besides special purpose properties, perhaps New Construction is most likely a perfect candidate for the Cost Approach. Don't forget the FDIC requirement for an "as is" value in proposed construction that may apply.

 

[Terrel L. Shields]

Why exclude it? If you don't understand how to do it, then take a course or two. Of the few appraisals I see, everyone avoids it like the plague. Why?

Estimate the land value
Estimate the replacement cost new
estimate the entrepreneurial profit
zero depreciation unless it has an externality, or an inadequacy or superadequacy...you address those in the sales approach, right? Do you?
Bingo.
The number should match the sales to a T.

So yes, I do the CA on almost every appraisal, new or not. And most clients want the cost approach included, check your engagement letter closely

 

[Sid Holderly]

New construction in most cases is $100 over a refi fee. Some clients do not give you much of a materials list or itemized builders contract. I always to the cost approach and it keeps me up on deprecaiton rates if you complete it for all appraisals.
Current land value plus new less depreciations +/- location type adjustment should be close to current resale.

 

[ramrcdk]

Hello,
I'm appraising single family proposed construction. What are some of you charging and does that include the cost approach?
I'm in an active new construction market, so thought that cost approach could be excluded in some cases. FNMA also states that its not required.
Thanks for any replies.

Hi CGA, Perhaps obtain some assistance may help. Quoting a Fee...and with NO info? Naaa.
New with zero age depreciation, for me, I would never NOT include the Cost Approach to Value. We have 3 approaches to Value, right,
to consider as being valid or WHY. New must 99.99999% of the time include the Cost Approach, really it's 100% of the time.
Won't you also have the Purchase Contract that includes many pages of builder cost, profit, options, specifications to review and apply comments???
Is SP typical, an over/under improvement, will market or income be in an approx range to the Cost Approach & regional or local multiplier, if applicable?
If not, why? Would there be a type of obsolescence to consider? Lot or land value within or greater than 30%??? and so on.

 

[CANative]

Get used to doing cost approaches. They tell you more than just another indication of value. Especially for new construction. I don't know how you can possible not consider and complete this approach and still present a credible highest and best use opinion.

 

[Tim The Enchanter]

Normal fee + 50% ish. How complex is it?
Yes do cost approach.

 

[Deleted member 77547]

A cost approach is a necessary component of a credible report for new construction. As a certified general you should be able to work through that quite handily. I've never done a new construction appraisal where the client didn't require it.

 

[CVal]

Thanks for the replies. Yes, will do cost approach in future jobs. Lee in L.A., +50% would be awesome. Around here, you tend to get crumbs for any type of additional work, complexity.

 

[Walter Kirk]

I have never done an appraisal on a SFR without completing a Cost Approach!