Joyce Potts
Elite Member
- Joined
- Feb 6, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Florida
Krystal,
The reason the cost approach asks for the 'contributory' value of site improvements is because they generally depreciate faster than the main structure(s).
Things like landscaping, concrete walks/driveways, fences, irrigation systems, docks, decks, boathouses and especially POOLS are generally broken out at their 'contributory' value, meaning the depreciation is already taken into consideration. It's NOT just about physical depreciation, e.g., while a pool may COST $60,000 it may only contribute $35,000 which is functional depreciation, not physical.
I sometimes will put an 'outbuilding' in the site improvements, but it depends on what kind of structure we're talking about. If it's a major contribution, I'll put in the area above and depreciate it at the same rate with the other major structures.
If it's a pole barn or large shed that's pretty old, I just include it in the overall site improvement contribution.
Either way, just explain what you did and why in your report.
Sorry, but I don't think there is really any right or wrong answer on this one, but I would disagree with your teacher that there is always a 'standard amount' for site improvements.
So are you now more confused than ever?
The reason the cost approach asks for the 'contributory' value of site improvements is because they generally depreciate faster than the main structure(s).
Things like landscaping, concrete walks/driveways, fences, irrigation systems, docks, decks, boathouses and especially POOLS are generally broken out at their 'contributory' value, meaning the depreciation is already taken into consideration. It's NOT just about physical depreciation, e.g., while a pool may COST $60,000 it may only contribute $35,000 which is functional depreciation, not physical.
I sometimes will put an 'outbuilding' in the site improvements, but it depends on what kind of structure we're talking about. If it's a major contribution, I'll put in the area above and depreciate it at the same rate with the other major structures.
If it's a pole barn or large shed that's pretty old, I just include it in the overall site improvement contribution.
Either way, just explain what you did and why in your report.
Sorry, but I don't think there is really any right or wrong answer on this one, but I would disagree with your teacher that there is always a 'standard amount' for site improvements.
So are you now more confused than ever?