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Cost Approach - Site Improvements

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robertbburns

Thread Starter
Freshman Member
Joined
Apr 7, 2007
Professional Status
Licensed Appraiser
State
Texas
As an appraiser who thinks little of the cost approach except in cases where the property is unique, What exactly are others using as site improvements under the cost section of the URAR? I know (flatwork, fencing, in ground utilities, outbuildings, landscaping, septic & well as applicable etc)should be considered. However does the house slab count as a site improvement or should it be considered as part of the house costs. I have heard from some that lenders require the cost approach solely for insurance purposes, so that the home can be adequately insured. If that is indeed the rational the slab cost should be included as a site improvement as it would remain after a fire. However this goes against how I was trained. Please Advise!:unsure:
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
The house slab is part of the house (that's why M & S include such data). Other items I put in the Site Improvements are IG Pools, Barns, Tennis Courts, etc. Cost Approach as completed by an appraiser is NOT the same as insurance value and I would recommend putting a statement in your report that excludes the use of the report for such.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I agree with Thomas, but also, you might want to include grading, especially if it is necessary to do terracing, blasting of rock and extraordinary grading. Driveways and paving, underground utilities and storage buildings.

Basically, I use it for anything not covered in the upper part of the cost approach.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
In my book, Tom and Mike are right. I am completing the cost approach for market value, not insurable value. If the lender chooses, against my advisement in my reports, to use the appraisal for insurance, than that's their mistake. The slat, as a connected part of the house, is part of the house. Site improvements include the driveway, the landscaping, grading, pools, barns, sheds, workshops, etc., but not any of the segregated parts of the house inself.
 

Jason Butler

Freshman Member
Joined
Apr 17, 2006
Professional Status
Licensed Appraiser
State
California
I am a little confused. Are you talking about the section entitled "As-is" value of Site Improvements? What would be the difference between that section and what you would add in the blank field under basement? I was taught to put the pool, fence, patios, etc. under basement, but then they are depreciated at the same rate as the rest of the house. My experience at the Assessor's Office would say to put in heat and additional plumbing under basement and pools, patios, landscaping, etc would be estimated in the "As-is" value of Site Improvements. Please help me to fill this out correctly. Thanks.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
To All,

This part of the forum is for non-professional public questions. It is not for real estate appraisers who want to ask other real estate appraisers how to do what they should already know as appraisers. Perhaps a trainee aside of that.

Webbed.
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Ask an Appraiser: Ask an Appraiser on AppraisersForum.com. For members of the public to ask general appraisal questions. . Please keep in mind that answers are for general informational purposes only and are not official, and are answered through the generosity of forum members.
This thread should be moved, however the OP states he is a member of the General Public. So which is it, Robert, are you an appraiser or just the General Public? I will act accordingly.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
If your assignment includes providing an insurable value opinion then you should be addressing that specifically and using the protocols and the data necessary to develop that opinion under that definition of value.

In fact, telling your readers that one is not necessarily equal to the other might not be a bad idea. Something along the lines of:

"The Cost Approach to Market Value should not be assumed to be consistent with an Insurable Value opinion."
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
Jason-Why would one include the improvements to the site (such as pool, patio, etc) under the basement? If you were taught that, I humbly suggest you correct your mentor. If you are in an area where the pool contributes functional obsolescence, it is much easier to place it in the Site Improvements. That way, the value the market tells you is already depreciated so you would not show functional obsolescence in the Cost Approach. Just not sure why one would think it's part of a basement, unless it is in the basement of a house.
 

Jason Butler

Freshman Member
Joined
Apr 17, 2006
Professional Status
Licensed Appraiser
State
California
sorry, I meant in the blank space underneath basement, not as part of the basement calculations
 
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