Cost Approach/Condominiums

[Steve122677]

Do I have to state why this approach was not developed in a condominium form, even though it does not ask for it anywhere?

 

[Howard Weeks]

I do. You are always supposed to consider all 3 approaches.

Just say in the reconciliation section something like:

Market, Cost, and Income approaches to value were considered in the valuation of the subject property. The Cost approach is not considered to be applicable for a single condominium unit within a condominium building. The Income approach was rejected in this predominantly owner-occupied market due to insufficient rental data to develop a reliable GRM.

 

[Steve122677]

Thanks Howard, I typically do that and have a standard comment. Just more for my own piece of mind since the form doesn't asks for it.....

 

[Lee Lansford]

Do I have to state why this approach was not developed in a condominium form, even though it does not ask for it anywhere?

Though it is probably obvious that for a subject that is (for example) an apartment with condo ownership that the cost approach is not readily applicable, you should state the reason why the CA is not included.

And...you state "...even though it does not ask for it anywhere": such is not relevant as to your obligations.

 

[Jerry Bone Jr]

If someone can build it, I can do a Cost Approach on it.

 

[c w d]

If someone can build it, I can do a Cost Approach on it.

Not for the going appraisal fees these days.

 

[Ken Tamblyn]

I do. You are always supposed to consider all 3 approaches.

Just say in the reconciliation section something like:

Market, Cost, and Income approaches to value were considered in the valuation of the subject property. The Cost approach is not considered to be applicable for a single condominium unit within a condominium building. The Income approach was rejected in this predominantly owner-occupied market due to insufficient rental data to develop a reliable GRM.

Or you can just state that the Cost and Income Approaches are not applicable to this assignment.