Cost Approach vs Value Opinion

[J Grant]

...though the improvements may not necessarily be the optimum use of the site.

It's residential zoning and a new house is on the site. What would be a more "optimum" use or the site than that?

 

[J Grant]

look for 4 components and move on.

 

[Joyce Potts]

Stop relying on Marshall & Miss and seek out local contractor estimates.

 

[Michigan CG]

It's residential zoning and a new house is on the site. What would be a more "optimum" use or the site than that?

Well if you start out with a site and decide to build a home that will cost more than it is worth in the end then the optimum use for the site would be to leave it vacant. This is why Highest and Best Use is analyzed as vacant and as improved.

 

[Lee Lansford]

It's residential zoning and a new house is on the site. What would be a more "optimum" use or the site than that?

The mere fact that the h&b use as vacant is with SFR improvements does not mean that a particular dwelling is the optimum use of the site.

 

[PropertyEconomics]

The mere fact that the h&b use as vacant is with SFR improvements does not mean that a particular dwelling is the optimum use of the site.

Less than optimum improvements, as improved, also does not necessarily mean they dont represent the current highest and best use of the site.

 

[Joyce Potts]

The mere fact that the h&b use as vacant is with SFR improvements does not mean that a particular dwelling is the optimum use of the site.

Possibly, but is it feasible to raze older residential improvements and rebuild new to maximize the potential HBU of the lot in markets that are not consistently undergoing revitalization or gentrification trends?

 

[mark young]

You didn't mention the date of the contract for the purchase of the new construction. Sometimes the contract is executed pre construction due to builder incentives. The length of time between the date of the contract and the effective date of the appraisal could be over 6 or 9 months, or possibly longer. Market changes during this period of time may explain the difference in sales comparison and cost approach (assuming cost of materials not significantly different during this time period).

 

[hastalavista]

Possibly, but is it feasible to raze older residential improvements and rebuild new to maximize the potential HBU of the lot in markets that are not consistently undergoing revitalization or gentrification trends?

One will never know with confidence unless one does the H&BU as-vacant.

 

[CANative]

The mere fact that the h&b use as vacant is with SFR improvements does not mean that a particular dwelling is the optimum use of the site.

The question they are asking is whether or not to continue the present use. It does not call for an extensive, in depth HBU analysis and it meets the needs and expectations of the intended user and their intended use. Somewhere in the selling guide it says that almost verbatim (or used to.)