john tolve
Freshman Member
- Joined
- Aug 11, 2008
- Professional Status
- Certified General Appraiser
- State
- New York
Hybrid approaches
If it matters what your peers say, then I say it is quacking like a duck. If the law says the approach cannot be considered then that is a jurisdictional exception. This is not a legal opinion. In the event of a conflict between USPAP (situations backed by law) and other law, what controls? I posed such a question to (i think) _former_ attorney expert in USPAP as an appraiser. The answer was that the answer may be incomprehensible to the answerer. The following is completely unrelated to that person’s answer (i am not winking, really not derived or related).
The following is not a legal opinion, only my own, and not an official opinion of the Appraisal Institute:
As taught in classes of the Appraisal Institute, the Sales Comparison Approach may include adjustments which are income based (as well as other hybrid adjustments in other approaches). You may have to explain that they come from the Income Approach and why they are necessary. Does this violate the controlling law of the jurisdictional exception if such an exception exists?
Example: It is common in my neck of the woods to consider income levels in the sales comparison approach of apartment buildings with varying rent stabilized, rent controlled and unregulated apartments. (In fact, the approach is often left out entirely because it can get wacky). You need good information to do that well. If there is not sufficient information to properly develop an approach (say sales approach), you may not develop it as per USPAP. Does the law require you to develop an approach for which there is insufficient information to conclude an opinion of value? It might.
It is possible there is sufficient information to develop the Sales Approach, but not sufficient information to reliably use particular comparables? In any case can you permissibly develop an income approach for the workfile as long as you do not consider it?
You may be influenced by sufficiency of information in your selection of comparables. You may explain why comparables were omitted based on insufficiency of information (explaining the quantity and/or quality that is lacking that makes that information insufficient to use them). You may include those that are partially indicative of a price indication and give them appropriately less weight. If you have sufficient specific information of income comparables in your market this does not preclude them from being used as comparables in the sales approach.
__________________
The above is posted on a real estate forum for consideration of sophisticated real estate peers. Contemporaneous off-the-cuff remarks may have been made me which even I may disagree with.
If it matters what your peers say, then I say it is quacking like a duck. If the law says the approach cannot be considered then that is a jurisdictional exception. This is not a legal opinion. In the event of a conflict between USPAP (situations backed by law) and other law, what controls? I posed such a question to (i think) _former_ attorney expert in USPAP as an appraiser. The answer was that the answer may be incomprehensible to the answerer. The following is completely unrelated to that person’s answer (i am not winking, really not derived or related).
The following is not a legal opinion, only my own, and not an official opinion of the Appraisal Institute:
As taught in classes of the Appraisal Institute, the Sales Comparison Approach may include adjustments which are income based (as well as other hybrid adjustments in other approaches). You may have to explain that they come from the Income Approach and why they are necessary. Does this violate the controlling law of the jurisdictional exception if such an exception exists?
Example: It is common in my neck of the woods to consider income levels in the sales comparison approach of apartment buildings with varying rent stabilized, rent controlled and unregulated apartments. (In fact, the approach is often left out entirely because it can get wacky). You need good information to do that well. If there is not sufficient information to properly develop an approach (say sales approach), you may not develop it as per USPAP. Does the law require you to develop an approach for which there is insufficient information to conclude an opinion of value? It might.
It is possible there is sufficient information to develop the Sales Approach, but not sufficient information to reliably use particular comparables? In any case can you permissibly develop an income approach for the workfile as long as you do not consider it?
You may be influenced by sufficiency of information in your selection of comparables. You may explain why comparables were omitted based on insufficiency of information (explaining the quantity and/or quality that is lacking that makes that information insufficient to use them). You may include those that are partially indicative of a price indication and give them appropriately less weight. If you have sufficient specific information of income comparables in your market this does not preclude them from being used as comparables in the sales approach.
__________________
The above is posted on a real estate forum for consideration of sophisticated real estate peers. Contemporaneous off-the-cuff remarks may have been made me which even I may disagree with.