Cost Approach and Indirect Costs

[CANative]

...

So in 2008 when people were lumping 20% or even 30% on for "EP"....within a year that had evaporated to essentially zero. So what purpose does EP really serve?

.../QUOTE]


It is a bit of a moving target, isn't it?

No. It's a great indicator of supply and demand. 30%, 40%, more? The market is wildly out of control. I remember IndyMac trying to strong arm me into backing out some of the EP I was including in my CA's. Said they couldn't do the loan with that in there.

Good! They shouldn't have done the loans apparently.

 

[Lost Cause]

So what purpose does EP really serve?

It gives appraisers the fudge factor enabling them to pretend that there is a relationship between cost and value.


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Despite this opinion, I like what CAN has to say about it above...

 

[BRCJR]

EP IS NOT part of a Cost Approach.

EI IS part of a Cost Approach.

For more insight read "In Defense of the Cost Approach" by E. Nelson Bowes, MAI, published by AI.

 

[CANative]

EP/EI is like Exposure time/Marketing time. One is looking back and one is looking forward.

But they are related.

 

[PropertyEconomics]

Is EP part of a sales price?

 

[BRCJR]

Is EP part of a sales price?

Most likely, at least part of the asking price. There may not be EP in a sale. You could lose on the deal.

 

[PropertyEconomics]

Most likely, at least part of the asking price. There may not be EP in a sale. You could lose on the deal.

Very true ... so it is possible the cost approach could include some EP if the market is "paying for it" ....?

 

[Joyce Potts]

I actually like that photo. More appraisal religious hypocrisy. Can you photo shop it into a Pope mobile vehicle too?

 

[CANative]

How about a USPOPE mobile?

 

[Joyce Potts]

How about a USPOPE mobile?

Ok, you're killing me here!