Define consulting please

[Jeff Horton]

I posted about this in the General but didn't get an answer. So will rephrase my question.

What is the definition of a Consulting assignement and how does it vary from Appraising.

I have a young man that wants to know if it is worth his time and money to finish out a basement in a home he is going to resale. I don't have to give him a value on this home. He wants to know how much value will the finished basement add. Sounds like this could be a consulting job to me.

 

[larryhaskell]

Jeff:

It would seem to me that you could complete a series of paired sales analyses to determine the contributory value of a finished basement vs an unfinished basement. Hopefully you can find properties with very similar physical characteristics within your market area. If not, use properties in similar, competing market areas. I would try and provide as many examples as possible and let your client make the final decision. Be cautious about giving a specific number.

The other alternative would seem to do an appraisal for this person and give an "as is" value with the unfinished basement and a "subject to" value if the basement were finished.

The first option may not be called consulting based on the definition in The Dictionary of Real Estate Appraisal, Third Edition. You are giving the contributory value of a single characteristic. I would pick the second option. Hope others chime in with similar or opposing views. Good luck.

 

[Mountain Man]

It may be easier to just do an appraisal in a before and after analysis with comps in a grid supporting both values. I don’t think I would give a $ value for the basement without a full market study. One of the problems is that the value can vary so much with the type of finishes, IE: a basement finished with two bedrooms, bath, recreation room and laundry room will cost and demand more than a big, open room finished with sheetrock and carpet. Therefore, you will need some idea or plans and specs of what he intends to do.

Since he wants a $ range or $ per SF, I don't know if this is would be considered a consulting job. I too will be looking for later post from the great ole' wise ones on the board.

 

[Jeff Horton]

USPAP Line 1307-1308:

An opinion of value or an opinion as to the quality of another appraisers work cannot be the purpose of an appraisal consulting Assignment.

Guess that makes this an appraisal.

My plan is to do some matched pairs of homes in the subjects size and quality range. Determine a value per contributory square foot price and give him the info and how I arrived at it. Any details I know and then he can make his determination from that.

 

[Mountain Man]

Maybe include a cost worksheet from M&S or other cost provider. Let him compair the cost to what the market thinks.

 

[David C. Johnson]

Jeff,

This response does not do much for defining Consulting, but it might be helpful for your assignment. BTW, my knee-jerk reaction is that if he is doing it for purely economic reasons, he should probably think twice, and certainly depending on how common finished basements (or basements at all) may or may not be in the neighborhood.

Some of the other posts may be applicable in the following thread also:

http://appraisersforum.com/bbs/index.cgi?read=24831

dcj

 

[Mike Garrett RAA]

Where is your copy of USPAP?

 

[jtrotta]

Mike

Jeff has his copy, it would appear he is looking for other interpretations;

it would be my suggestion that you read it carefully a couple of times, along with the advisory opinion's over the past few years, and it needs to be applied very carefully, and you need a "Pre-Nup" contract with whomever your doing this consultation with.

I mention the "Pre-Nup" from past experiences, in the begining everyone is willing to take the adventure, but if bad news shows it's ugly side, you can be sure it will be like getting a divorce; and they won't want to pay.
the "Pre-Nup" guarantees payment and other solutions if drafted properly.


8)

 

[Bill_FL]

Mike,

Consulting would be any service you could offer a client that would not include having YOU develop an opinion of value. A common use would be a client hiring you to be an advocate in an ad valorem appeal. The client would hire you to be their advocate, however any valuation or opinions of value would have to be developed by another appraiser.

 

[Ray Ohler]

I had a question a week or two ago about an assignment I was asked to complete. I received conflicting advice from two USPAP instructors on whether or not it was an "Appraisal Consulting Assigment" (I did not believe it was, it was only a market study, reciting factual information and sale prices, offering no advice, recommendations OR opinion(s) of value). Anyway, I ran it past the ASC who referred me to the Foundation and the PA Board (forget the PA board, they told me they were sorry but they couldn't help). I spoke with Jim Parks at the Foundation. His reply was... if the assignment does not include AT LEAST ONE opinion of value (whether the appraiser completing the assignment OR commenting on someone else's) then it IS NOT a "Appraisal Consulting Assignment". However, if the person completing the assignment is a certified appraiser, then they are subject to the Ethics Rule (don't mislabel anything).

So, I would say, based on that information, Jeff's assignment IS an Appraisal Consulting Assignment. What is being sought is "contributory value" (or lack of) and possibly a conclusion whether or not to proceed with the basement. Hope this helps.