• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

External obsolescence prove it exists

Status
Not open for further replies.
Dear Mr. Hawkings,

:rof::rof::rof:

Reminds me of something I heard on a TV program this weekend. Didn't catch it all, but the basics was there was this guy who made a bookoo of money investing in the stock market during the Cuban Missile Crisis. Later someone asked him something like "weren't you afraid?" He replied: "Sure, I was just as afraid as everyone else, but I figured that if the world didn't blow up the market would come back and if it did blow up it really didn't matter if the market came back."
 
:rof::rof::rof:

Reminds me of something I heard on a TV program this weekend. Didn't catch it all, but the basics was there was this guy who made a bookoo of money investing in the stock market during the Cuban Missile Crisis. Later someone asked him something like "weren't you afraid?" He replied: "Sure, I was just as afraid as everyone else, but I figured that if the world didn't blow up the market would come back and if it did blow up it really didn't matter if the market came back."
That tradeoff is the same as Pascal's Wager. http://en.wikipedia.org/wiki/Pascal's_Wager
 
YA GOT ME. You're right because the property didn't actually sell.

Now Steve, lets see if you can keep up.

Say the property did sell for $800,000. What say ye now?

The Slow One

As usual Steven's intellect and grasp of the issue is at once astounding and difficult for me to understand. I believe he is saying that from the perspective of market value there never was any kind of decrease in value. The property in question was always valued at $800K, the builder just spent more than that on it.

I think Steven has said cost is not value, but we have the tools of depreciation and obsolescense to try and explain that it will once we know what the value is. We can force the value with these tools.

Now, Jim B challenged us to prove with mathematics that there is an actual method of measuring EO. Is it really only something that equals the difference between cost and sales?
 
Yes, I think so. Why make it more complicated than it needs to be?
 
As usual Steven's intellect and grasp of the issue is at once astounding and difficult for me to understand. I believe he is saying that from the perspective of market value there never was any kind of decrease in value. The property in question was always valued at $800K, the builder just spent more than that on it.
Sounds like you understand it perfectly. It's a new property. There was nothing in the givens that suggested a passage of time and change. So, when did the loss in value occur?

Which makes more sense to you that the "house" is "suffering" from a "loss" or the person who built it is suffereing a loss?
 
Sounds like you understand it perfectly. It's a new property. There was nothing in the givens that suggested a passage of time and change. So, when did the loss in value occur?

Which makes more sense to you that the "house" is "suffering" from a "loss" or the person who built it is suffering a loss?[/quote'

Mr. Hawkings:

The house suffered a loss?

The person who built the house suffered a loss?

The person who's money was invested suffered a loss?

The lending institution who financed the venture suffered a loss?

How would you survive without the gray area of semantics?

You see, land is nothing more than space--an inverted pyramid, if you will.

How can space suffer a loss unless that 'space' has boundaries and with an established benchmark of market value? What is your space worth.
 
How would you survive without the gray area of semantics?

You see, land is nothing more than space--an inverted pyramid, if you will.

How can space suffer a loss unless that 'space' has boundaries and with an established benchmark of market value? What is your space worth.

A question posed by someone who possibly does things backward and in high heels.

I like Jack Nicholson's quote about doing things backward in high heels in As Good as it Gets, "Without reason or acountability." I mean nothing deraogtory, sexist or personal in that comment. I am simply an ignorant red-neck from the boondocks.

Have we gone beyond the dogmatic statement that land appreciaties and buildings depreciate, or are we still stuck on that obscure, specialized, misleading and inaccurate definition of depreciation?

It seems that our appraisal-teachers forget to remember there is a larger community out there (called clients and intended users) using a similar language trying to understand what we say and that it hasn't had its reasoning powers compromised or its lexicon censored.

This perpetual forum definition maze or whatever it is would be fun if some didn't take it seriously and believe there are rules made up for appraisers that make sense.:Eyecrazy:

When we tackle confoming our rules to something that resembles what the rest of the world does and at least get to a point where the explanations make sense, we will be at the very threshhold of professionalism and ready to educate ourselves in appraising terminolgy that can be used to explain what we are doing.:new_multi:

I for one will appreciate that.:rof:

Does anyone have an explanation for how we became strangers in a strange land?
 
Last edited:
Sounds like you understand it perfectly. It's a new property. There was nothing in the givens that suggested a passage of time and change. So, when did the loss in value occur?

Which makes more sense to you that the "house" is "suffering" from a "loss" or the person who built it is suffereing a loss?

Seems we will stop at nothing to cover for those suffering from stupidity and make sense of something that has a simpler explanation.

Incidentally, I e-mailed Marshall & Swift a question in this regard with a little more. I expect they will ask I never mention Steven Santora to them again.

I suspect Marshall forgot to confer with Swift about costs in our area. Probably a better explanation than stupid builders.

Yet another survey I must complete myself?:new_321:
 
If the property sells for $800,000, then there is a loss of value for the improvements. That loss of value can be proven by the cost approach; i.e. the CA, before func/EO is taken into account, predicts MV of $1m, actual SP is $800k. Technically, it didn't actually go "down" in value because this is the first time it sold, but no one could argue that the owner didn't lose money. Whether any of the money lost is related to land value depends on whether $300k is a typical selling price for a lot in that sub.

(Emphasis added.)

It does indeed seem that we sometimes get involved with our own semantics and forget to look at the big picture... what the client is interested in. The idea that no one lost on a deal where a property that cost $1m to put together and would sell for only $800k is... well, to quote Spock, illogical.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Back
Top