Cost to cure adjustment on the grid?

[alebrewer]

What's the difference between an estimate and an opinion?

This!

 

[J Grant]

What's the difference between an estimate and an opinion? If the subject needs X amount for new facia boards or something, what's wrong with subtracting that from the comps? I think seeking out market reaction for a cost to cure is a bit much.

There was an epic thread recently on it - USPAP states an appraisal is an opinion. It does not state an appraisal is an estimate. Estimates can be used in appraising just as math, statistics, data etc can be used to support or help develop the opinion.

Short list of what is wrong with subtracting cost of a repair or replacement as the exact $ amount as the adjustment.

1) Cost does not always equal value is a fundamental of appraising,

2) The $ cost may not be what the market returns as a price reaction

3) If the cost used as adjustment turns out to be different than what turns out then the $ amount actually needed or spent to repair/replace, it was "wrong" and then what are you going to do...

 

[alebrewer]

There was an epic thread recently on it - USPAP states an appraisal is an opinion. It does not state an appraisal is an estimate. Estimates can be used in appraising just as math, statistics, data etc can be used to support or help develop the opinion.

I think TMG's question was - is the estimated cost to cure an opinion? To which any cogent person would respond, 'yes'.

 

[alebrewer]

Short list of what is wrong with subtracting cost of a repair or replacement as the exact $ amount as the adjustment.

1) Cost does not always equal value is a fundamental of appraising,

2) The $ cost may not be what the market returns as a price reaction

3) If the cost used as adjustment turns out to be different than what turns out then the $ amount actually needed or spent to repair/replace, it was "wrong" and then what are you going to do...

yes.

 

[TMG]

Any time I give a cost to cure, I clearly state; "appraiser is not a (plumber, painter, carpenter, or whatever is involved) And that this is an estimate only, actual cost may vary. If actual cost is different, I reserve the right to change this appraisal".

 

[Mark K]

I think TMG's question was - is the estimated cost to cure an opinion? To which any cogent person would respond, 'yes'.

Unless the estimate was in the form of a bid from a contractor at which time it becomes a fact.

IMO, simply deducting a bid for a C2C from the appraised value will likely result in an inaccurate/misleading report.

 

[alebrewer]

Unless the estimate was in the form of a bid from a contractor at which time it becomes a fact.

Well, it's a FACT that it's the contractor's ESTIMATE (or opinion). The estimate/opinion doesn't become fact until the work is performed - at which time, you know the true cost (fact).

 

[J Grant]

I think TMG's question was - is the estimated cost to cure an opinion? To which any cogent person would respond, 'yes'.

If he wants to claim the estimate is his opinion, then back up why - the cost to cure estimate for labor and materials is $6000 and that is also my adjustment because - explain why

 

[alebrewer]

If he wants to claim the estimate is his opinion, then back up why

How can an estimate be anything other than an opinion, J? It's not a fact, and it's not generated by a machine. How is an estimate not an opinion of how much it will cost to cure the problem? This really is a simple concept.

 

[J Grant]

Any time I give a cost to cure, I clearly state; "appraiser is not a (plumber, painter, carpenter, or whatever is involved) And that this is an estimate only, actual cost may vary. If actual cost is different, I reserve the right to change this appraisal".

I always state a similar thing in an estimate of cost to cure or cost to repair. However I do not say if different would change the appraisal - since I usually do not use that cost estimate as the $ amount adjustment (though I might if supported that they would be the same/equivalent $ amount)