Economic obsolescence

[SANDY]

Do cost approaches on your comps, compare what they sold for.

Oh wait, that would be a ton of work.

Yikes- you would better off not exposing your methods!

 

[CANative]

SANDY... you should email your license back to the state. It's faster than regular mail.

 

[SANDY]

OK, <moderator edit>, just another BS Sandy thread. Go crawl back under your rock, where you are most useful.

Ok see ya! Don't let the door hit ya!

 

[SANDY]

SANDY is just confused. Economic obsolesence IS external obsolesence. In this case there are no externalities caused by things like being next to a hog rendering plant. The problem is that there is a supply problem. No one will build a house because there is no profit to be made due to the imbalance in supply and demand. Yet SANDY is forced to build a theoretical house but the CA turns out to be much higher than market sales of similar property.

If there is no physical or functional depreciation going on and there are no hog rendering plants nearby then the difference is externalities (economic obsolesence.)

Ok Mr. expert-I assume that you are checking the box yes for external obsolescence then and explaining to your clients your methods for reconciling your approaches to value.:icon_lol:

 

[SANDY]

Ok then- If you are just ignoring the huge difference in your cost and market approaches, how are you reconciling your approaches to value?

 

[SANDY]

SANDY... you should email your license back to the state. It's faster than regular mail.

You can't hang with me!

 

[CANative]

You're just gonna have to acknowledge that you have a huge hole in your experience and training at this time. But it's still probably worth trying to teach you something. But I'm not going to post the entire contents of appraisal texts, journals, or the courses and seminars I've taken over the years.

I don't just appraise houses on forms for lenders. I work extensively in commercial property and I get the benefit of having to expand my experience daily.

I do a lot of hotel valuations and they're all retrospective. Often I have to research the market on a national basis. You should see all the hotel listings that say things like "being offered at below cost."

The problem is that if you just browse through the local MLS the listings don't say "this house is being offered at below cost." But that's exactly what's happening.

Do like Marion suggested and do cost approaches on your comparable properties. Do this over and over again and you'll eventually develop a good sense of external/economic obsolesence in your market. That's your market supported method.

 

[Scott R Marshall]

Ok then- If you are just ignoring the huge difference in your cost and market approaches, how are you reconciling your approaches to value?

One of 2 ways. You can make an adjustment for external obsolescence on the cost approach to account for the economic obsolescence present (which would be based on what your SCA indicates market value for the subject to be in addition to doing cost approaches on your comparables) or you can reconcile that the cost approach to value was given no weight in determining an opinion of market value as the market area appears to be experiencing economic obsolescene, with current market values not supportive of current building costs.

 

[Tim Hicks (Texas)]

All these years on the forum and I've NEVER seen a thread with SANDY in it that contained no BS. I'm sick of this member.

And I am the jerk?

 

[Meandering]

Yikes- you would better off not exposing your methods!

You have a better method?

Market derived depreciation, look it up, read about it.

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