- Joined
- Jan 14, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Colorado
Good discussion!
Every appraisal should consider ALL approaches to value...then discount those that do not accurately reflect the value. To say..."cost approach does not work is to say..."I am just too lazy to take the time to apply proper technique in developing it". I just love it when an appraiser says .. "Income approach not developed due to a lack of data". There is always data (at least in my market) if one is willing to go look for it. An MAI friend of mine taught me early on in my career to use this statement.
"The income approach does not apply as the subject serves it's best function as an owner occupied single family residence".
The cost approach should be worked up if nothing else than to determine the site value AND to be used as an indication of the highest value the subject would bring using the principle that a knowledgable buyer would not pay more for a "used" home than a new one. Did I say that correctly? Normally, but not always, the cost approach is higher than the sales comparison approach. When it isn't you have a good indication of a changing market with possible lack of supply or outside influences what make properties highly desirable. We see that alot in older smaller homes near a major hospital or the downtown area.
Guess that is what appraising is all about...instead of just "form filling"!
Every appraisal should consider ALL approaches to value...then discount those that do not accurately reflect the value. To say..."cost approach does not work is to say..."I am just too lazy to take the time to apply proper technique in developing it". I just love it when an appraiser says .. "Income approach not developed due to a lack of data". There is always data (at least in my market) if one is willing to go look for it. An MAI friend of mine taught me early on in my career to use this statement.
"The income approach does not apply as the subject serves it's best function as an owner occupied single family residence".
The cost approach should be worked up if nothing else than to determine the site value AND to be used as an indication of the highest value the subject would bring using the principle that a knowledgable buyer would not pay more for a "used" home than a new one. Did I say that correctly? Normally, but not always, the cost approach is higher than the sales comparison approach. When it isn't you have a good indication of a changing market with possible lack of supply or outside influences what make properties highly desirable. We see that alot in older smaller homes near a major hospital or the downtown area.
Guess that is what appraising is all about...instead of just "form filling"!