Economic obsolescence

[SANDY]

Where did this information come from?

Pulled it out of my arse like the CA!woohoo

 

[SANDY]

Where did this information come from?

Post your opinion if it differs!

 

[CANative]

Point 1:
The cost approach is the only method that is applicable to all improved properties. It's nonsense to say things like "if" and "when" applicable. If you are valuing an improved property it is always applicable (capable of being applied.)

Point 2:
It was ridiculous for the OP to have tried to disaggregate "economic obsolesence" from "external obsolesence." It says to me that the OP does not understand depreciation but is finally trying to understand. That's a good thing IMO. The bad thing is trying to discuss things with the OP because of the OPs attitude problem.

Point 3:
Cost approaches "for insurance" is not always why lenders want this approach. The CA, properly completed, contains a lot of relevant and useful information such as land to improvement ratio (important in determining under or over improvements, conformity to the market, etc.)

Furthermore, it is frequently desirable to first perform the cost approach because important facts can be learned about the subject property that will be useful when performing the comparative sales and/or income approach.

Not to mention shedding light on the exact question you seek the answer to in this thread - economic obsolesence.

 

[Tim Hicks (Texas)]

You haven't been listening. Didn't you see Scott and me discussing it and I told him that what he has been doing ie... leaving the cost approach out there way higher and adding addendum language about EO was what we had been doing and that were starting to called out for it?
I never said the market here was in recovery-not listening again!

Sometimes I have to question some peoples' ability to actually analyze anything if they can't get beyond simple reading. I guess that could explain so many posts being off point.

OK, Einstein. I am not listening to anything. I am reading. Mostly confrointational reading. I don't don't know your market. If it was that way here, I would have figured out the adjustment a long time before now and derived my adjustment from a proper cost approach, proper physical depreciation and actual sales data. It would be different for each individual property, market and property type.

What does your mentor say you should do?

 

[SANDY]

OK, Einstein. I am not listening to anything. I am reading. Mostly confrointational reading. I don't don't know your market. If it was that way here, I would have figured out the adjustment a long time before now and derived my adjustment from a proper cost approach, proper physical depreciation and actual sales data. It would be different for each individual property, market and property type.

What does your mentor say you should do?

My mentor says if ya never encountered it before in your market don't listen to you!

The second highlighted comment from you is wrong so my Mentor is right.

 

[Tim Hicks (Texas)]

My mentor says if ya never encountered it before in your market don't listen to you!

The second highlighted comment from you is wrong so my Mentor is right.

Tell me, oh scholar, how my second comment is wrong. Every market is different. Every sub-market is different. Every house is different. There is no such thing as a constant (set) depreciation for every property. You actually think they are building and selling new homes now and selling them for less than cost?

 

[CANative]

Member since 2007. It's now 2012. You've been with this mentor for 5 years and you still haven't learned much. I don't believe your mentor.

 

[23Degrees]

Point 1:
The cost approach is the only method that is applicable to all improved properties. It's nonsense to say things like "if" and "when" applicable. If you are valuing an improved property it is always applicable (capable of being applied.)

We could argue forever about applicable - so fine - its applicable. One can also apply Preparation H to their nose but that does not mean it is necessary, makes any sense, or is doing anything useful.

We can refer to USPAP on the issue of "when" with regard to the cost approach. Standard 1 makes prominent use of the word "when" with regard to the necessity of the cost approach toward the development of credible results. Clearly it is not always necessary for credible assignment results or else it is time to change USPAP.

So lets drop "applicable". It's a weak term introduced to me years ago by a USPAP instructor. Let's go with how USPAP treats it. It would be nice if the cost approach was utilized "when" it was necessary for credible results by practitioners with the ability to do so properly for appropriate compensation.

 

[SANDY]

We could argue forever about applicable - so fine - its applicable. One can also apply Preparation H to their nose but that does not mean it is necessary, makes any sense, or is doing anything useful.

We can refer to USPAP on the issue of "when" with regard to the cost approach. Standard 1 makes prominent use of the word "when" with regard to the necessity of the cost approach toward the development of credible results. Clearly it is not always necessary for credible assignment results or else it is time to change USPAP.

So lets drop "applicable". It's a weak term introduced to me years ago by a USPAP instructor. Let's go with how USPAP treats it. It would be nice if the cost approach was utilized "when" it was necessary for credible results by practitioners with the ability to do so properly for appropriate compensation.

No argument here on that except in my "third world" it's not 23 degrees its 96degrees in the shade.

 

[SANDY]

Point 1:
The cost approach is the only method that is applicable to all improved properties. It's nonsense to say things like "if" and "when" applicable. If you are valuing an improved property it is always applicable (capable of being applied.) bullcrap

Point 2:
It was ridiculous for the OP to have tried to disaggregate "economic obsolesence" from "external obsolesence." It says to me that the OP does not understand depreciation but is finally trying to understand. That's a good thing IMO. The bad thing is trying to discuss things with the OP because of the OPs attitude problem. So it's therefore impossible to estimate them separately or per your theory if external obsolescence is present then all three subsets are present! I don't argue with or discuss things with fools

Point 3:
Cost approaches "for insurance" is not always why lenders want this approach. The CA, properly completed, contains a lot of relevant and useful information such as land to improvement ratio (important in determining under or over improvements, conformity to the market, etc.) Point taken!

Furthermore, it is frequently desirable to first perform the cost approach because important facts can be learned about the subject property that will be useful when performing the comparative sales and/or income approach. Even when it's not applicable?

Not to mention shedding light on the exact question you seek the answer to in this thread - economic obsolesence.

Darkness is all around you on the mountain.