Condo Cost Approach?

[Don Clark]

Bill,

The "air rights" description does not apply in all condominiums. In my market we have the majority of detached condos where the condo owner has full ownership of the entire structure, and is responsible for it's maintenance, upkeep, and repair. In fact we have many condos that consist of only 2 units, in the entire condo, no condo fees, and no owners association. Not all markets are alike. For the 1,0200th time...."A Condominium is a form of ownership, not an arcetectural style". And, the textbook definition of a condo only applies to condos in attached dwellings, and generally only in high rise condo's. Example of a 2 unit condo below:

 

[incognito]

Don, I agree with everything you say.

My comment was merely a caution that IT IS POSSIBLE for there to be forms of condominium ownership which may or may not include exclusive use and/or non-exclusive use partial interests of common areas, partial interest in limited common areas, and even exclusive use with divided ownership interest in the actual walls and roof of a detached SFD (just as you have indicated that they can be owned fee simple, as well), as is common in "the high rises". Like you say, it has nothing to do with style, but with ownership interest, and that was my point. If you can not reproduce 1/50th of something, how can you accurately estimate the cost to do so?

I'm sure you have, but I doubt many have actually read the entire condominium declaration. It is amazing what can be creatively done in condominium creation! And no 2 really seem to be the same...

 

[Carnivore]

I think your best bet is to offer to do an insurance replacement cost opinion, but stay away from implying that your conclusion has anything to do with market value. It can't....

Bill, the problem with what you suggest is that most condo's have a general facility/complex policy that covers the exterior of the buidlings and owners provide seperate coverage for their specific interiors.

Basically it would be meaningless, unless you broke it down and highlighted what parts were the owners.

This is BS, the dang insrance agents dont want to do there job, because its to rsiky. Duhh, then why are we doing them for free?

 

[Couch Potato]

I've seen detached condos where the owner only owned paint-to-paint on the interior and I've seen attached condos where the owner owned the exterior on the front and rear as well as to the back of the studs for the adjoining walls on the interior (2x4 studs on 2x6 plates with each side having its own 2x4 studs, dividing line was a zig-zag from stud to stud.) If the unit definition includes the structure, some form of cost estimate may be appropriate.

 

[Vegan702]

Couldn't you just provide the cost to rebuild the the actual unit? Forget about figuring out what 1/50th of the pool might be, etc.? I don't see how figuring the cost to rebuild the actual unit wold be too hard. Charge them an extra $xx.xx and be done with it with a disclaimer.

 

[Joyce Potts]

I think everyone is making this way too complicated. Many detached SFR are condo. If it's for insurance purposes (which I have the same disclaimer, but they do it anyway) is to simply give them the cost to replace like you would any other freestanding home.

You have land and improvements. Just give them the replacement cost on the 'improvements' and caveat the on-site and off-site improvements, if any.

 

[hal380]

Its a matter of adding to the scope of work

I think everyone is making this way too complicated. Many detached SFR are condo. If it's for insurance purposes (which I have the same disclaimer, but they do it anyway) is to simply give them the cost to replace like you would any other freestanding home.

You have land and improvements. Just give them the replacement cost on the 'improvements' and caveat the on-site and off-site improvements, if any.

Hi Joyce;
I understand what you are saying, and if the cost approach requirement was part of the original order, and you were willing to do it then fine. But the burr under the saddle here is that when I've done my job and NOW they make this requirement.

This is just like after you have done a SFR via 1004, and then they come back at you and ask/require a rent survey, you would not hesitate to require additional compensation wouuld you? Same thing here.

Regards

Hal

 

[Vegan702]

Charge them $xx.xx to do it after the fact, or maybe build it into your business model so that these things are already covered.

 

[Kevin Mc]

Could you?...yes.....

Couldn't you just provide the cost to rebuild the the actual unit? Forget about figuring out what 1/50th of the pool might be, etc.? I don't see how figuring the cost to rebuild the actual unit wold be too hard. Charge them an extra $xx.xx and be done with it with a disclaimer.

But I wouldn't incorporate it as part of the appraisal after the effective date. I agree with Andrew, they are trying to get everything for nothing. I would say no way.

 

[Joyce Potts]

Hi Joyce;
I understand what you are saying, and if the cost approach requirement was part of the original order, and you were willing to do it then fine. But the burr under the saddle here is that when I've done my job and NOW they make this requirement.

This is just like after you have done a SFR via 1004, and then they come back at you and ask/require a rent survey, you would not hesitate to require additional compensation wouuld you? Same thing here.

Regards

Hal

All depends on how much you value the client relationship. For me, this wouldn't be a big deal. But don't forget your disclaimers and caveats.