Extraction Method

[djd09]

Show me the math...that led to that conclusion.

Come to East Cleveland and use the CA. Purple koolaid.

The Brookings Institute would love some of these posters.

 

[BRCJR]

We do not require the cost approach, but it is my understanding that the reason some lenders do is for insurance purposes...

.......and those lenders are setting themselves up for a lawsuit when then property is destroyed and the customer is under insured.
All a lender should do is require enough coverage to cover the loan amount. The remaining liability is on the insurance agent and the property owner.

 

[gregb]

The loan amount could presumably cover both the site & the improvements...

 

[BRCJR]

Maybe time for another thread but I can assure you that the cost approach is meaningful for residential assignments in multiple ways but I don't want to muddy the waters here with that discussion.

...like determining economic obsolescence, maybe?

 

[alebrewer]

The loan amount could presumably cover both the site & the improvements...

Now that would be an interesting take by a lender. Not sure who'd be on board with that, but there may be someone out there willing to lend based on the cost approach for residential properties...

 

[alebrewer]

...like determining economic obsolescence, maybe?

Functional would be more fun.. Economic is, at least IMO, fairly straightforward, and really can only be determined by paired sales or rent loss, at least IMO.

I'm in!

 

[BRCJR]

The loan amount could presumably cover both the site & the improvements...

So, as a lender I still want my outstanding balance paid off. I don't want to foreclose on the property and have to sell it to get any portion (land value) of what you owe me back. Therefore, I require a certain insurance amount be carried. Don't like it? Go get your loan elsewhere.

 

[Zephyr999]

Come to East Cleveland and use the CA. Purple koolaid.

The Brookings Institute would love some of these posters.

You're funny...and avoiding the question.
I stem first from a world of science...doing silly things like periodontal probings on healthy and diseased mouths. Why healthy too? Because it matters in the world of standard practice and procedures of what would be expected. Ignoring protocols is a personal choice not a professional one. Maybe I'm narrow minded in this respect...either way, what some choose to do as a lower standard is just that: a lower standard.

 

[djd09]

and misleading is misleading. i can change whole markets with the CA.

my new policy is i do not answer questions.

 

[BRCJR]

Functional would be more fun.. Economic is, at least IMO, fairly straightforward, and really can only be determined by paired sales or rent loss, at least IMO.

I'm in!

Until you know cost to build please explain how to determine economic obsolescence?