Cost Approach and those who "mail it in"

[J Grant]

If you start off with one type of value you will finish with the same type of value.
________
I agree with this statement!

 

[J Grant]

I could have answered these questions without ever having seen a 1004 fannie report. They are fundamental.

I'm going to wear you down by responding to your multi-paragraph arguments with one liners.

Not fair, lol!:new_multi:

 

[CANative]

The FannieForm is nothing more than the medium used to jot down (Standard 2) the results of what you figured out (Standard 1).

Take a peek at SR1-2(c): Identify the type and definition of value.

You've already figured out that the results you are reporting (step 2) on the form (no matter where on the form) are market value because you did that in step 1.

 

[PropertyEconomics]

:laugh:

Trust me, I know how you feel! :new_smile-l:

I feel like I am in great company, DeSaix & CANative, great company indeed.

 

[J Grant]

https://www.appraisalinstitute.org/findappraiser/downloads/brochures/Understand_Appraisal.pdf

From the Appraisal Institute , referencing the three approaches to value, it says exactly what I was stating in my posts...the value indicators are developed and then the DIFFERENCES among the value indicators are addressed in the reconciliation.

Througout the document, they are referred to as VALUE INDICATORS.

The AI does not refer to them as market value indicators.

The AI does not refer to them as market opinion value indicators.

The AI does not say (nor have I seen in any published reputable source) that the three approaches to value indicators, if done correctly, should yield similar values.

 

[JSmith43]

The AI doesn't require it's educational materials to be vetted by special ed certified instructors

 

[CANative]

What we've all been trying to tell you is that the VALUE INDICATION is predicated on the definition of value identified early in Standard 1.

If you identify Use Value in that step then all indications will be for Use Value. If you identify Market Value then all indications will represent Market Value. And so on and so forth.

The reason that the AI texts (and others) use the generic term "Value" is because they assume that most will understand the above concept and not need a separate discussion of each type of value. It saves on ink and paper.

 

[J Grant]

What we've all been trying to tell you is that the VALUE INDICATION is predicated on the definition of value identified early in Standard 1.

If you identify Use Value in that step then all indications will be for Use Value. If you identify Market Value then all indications will represent Market Value. And so on and so forth.

Arrghh!! (tearing out hair). We agree that when an appraiser accepts an assignment, they understand the purpose of the appraisal, MV, or use, value, etc. (type of value defined in standard one). That was never the issue.

For now let's say it is MV, and we understand this is the purpose of the appraisal and definition of vlaue in standard 1. That STILL does not mean that the value indicators developed in our report represent market value till WE SAY THEY REPRESENT MARKET VALUE, AND WE SAY THAT IN THE RECONCILLIATION. In the reconcilliation, we exclude, or include any of the three approaches and reconcile how much weight (or no weight) we give to each one as a credible support in arriving at our opinion of MV.

The three approaches to value are ALWAYS described in neutral terms, as "value indicators", no matter whan type/definition of value we are looking for, because the values derived from any of the three approaches are VALUES, not any particular TYPE of values, till we decide, in the reconciliation, to rely on any of them as credible guides to market value, oro liquidation value, (r type of value is defined in standard 1 of the report we are working on.)

The reason that the AI texts (and others) use the generic term "Value" is because they assume that most will understand the above concept and not need a separate discussion of each type of value. It saves on ink and paper.

Language is specific for a reason

 

[CANative]

You're trying to say that the results of the various approaches are not indicative of the value identified in SR 1-2(c) until you say they are.

That's wrong thinking.

The reason I'm harping on this is because this thinking can result in errors in development. The evidence of this is the incongruity you're finding between the CA results and the SA results. You don't seem to understand that you're developing the CA for purposes of arriving at a market value indication and so you must punch in some market derived data.

 

[J Grant]

Why is that wrong? That is how the appraisal is developed, per methodlogy, the appraiser arrives at their value opinion in the reconciliation, it is common to exclude or not weight one of the approaches if the appraiser feels the indicated value does not represent market value (or whatever type of value appraiser is trying to develop)

I understand that from the outset of the report, the appraiser is analyizing and gathering market data and feedback from particpants for the type of value defined in standard one, but that still does not mean the value indicators THEMSELVES represent the MV the appraiser is looking for...it is the appraiser's JUDGEMENT and OPINION that makes any of the neutral values MV, or whatever value type...that is where we take the liability and earn our money, when we state our point value opinion type of value and sign our name and take responsibility for stating a type and amount of value derived from the value indicators.

Till we use our judgement to rely on the value as a type, the value is a numerical amount , a neutral value...numbers are always neutral till we assign them a value, or meaning...a million dollars $1,000,0000 the number on a blank page is neutral, when we define the $1,000,000 as an amound contested in an estate between heirs, it takes on one meaning, and if we define the $1,000,000 as an amount used to buy stock shares and trade on margin it assumes another meaning...WE give the dollar amounts, the value indicator amounts meaning as a defined type of value, in and of themselves they are neutral.