Help with Idaho Reciprocity exam-what is "Reconciled Annual Depreciation"

[MRand100]

Hello. I am a 9 year experienced appraiser licensed in 2 states (WA/OR). My son is new and is licensed in OR/WA. He would like to move to Idaho. The reciprocity exam has some interesting questions, specifically on page 2.

https://dopl.idaho.gov/wp-content/uploads/2023/06/REA-Appraiser-Reciprocity-application.pdf

He has easily answered all the questions down to

"Reconciled Annual Depreciation" I have spent several hours trying to find ANY resources on the internet, youtube, in classwork. I cannot figure out what they are asking.

Any ideas? I am wondering if the word they mean is Accummulated instead of Annual? Thanks in advance.

 

[DWiley]

The depreciation used in the cost approach is supposed to be market supported (not just taken from a book). Page 5 in that doc provides a worksheet for providing that support using extraction.

Just as one takes the indicated value from each comp and reconciles that to a final value in the SCA, when doing depreciation analysis, one analyzes the depreciation observed in each comp and reconciles that to a single indication.

They gave the annual rate for comp 2. The problem is to calculate the annual rate for comps 1 and 3 and then reconcile them all into an indicated annual rate.

 

[MRand100]

Thank you! It would have been helpful if there were some actual instructions. He gets it now and so do I.

 

[Elliott]

AI says:

What is Reconciled Annual Depreciation as used in real estate appraisal?

Show drafts

In real estate appraisal, Reconciled Annual Depreciation is not a commonly used term. However, it could potentially refer to a few different concepts related to the depreciation of a property's value over time:

1. Depreciation Rate:

• Consistent Estimation: Appraisers might use a reconciled annual depreciation rate to ensure consistency in their valuation calculations.
• Considering Various Factors: This rate could be derived by considering factors like the property's age, physical condition, functional utility, and economic obsolescence.

2. Depreciation Calculation:

• Reconciling Different Methods: Appraisers may use multiple methods to estimate depreciation (e.g., age-life method, straight-line method, etc.).
• Ensuring Accuracy: Reconciling these calculations helps ensure that the final depreciation estimate is accurate and reliable.

3. Reconciliation of Depreciation with Other Valuation Approaches:

• Consistency Across Approaches: In real estate appraisal, multiple approaches to value are often used (e.g., sales comparison, cost approach, income capitalization).
  
  
• Aligning Depreciation Estimates: Reconciling depreciation estimates across these different approaches helps ensure a consistent and credible valuation.

To better understand the specific meaning of "Reconciled Annual Depreciation" in a particular appraisal context, it's essential to consider the following:

• Appraiser's Methodology: Different appraisers may have their own specific approaches to calculating and reconciling depreciation.
• Property Type and Market Conditions: The type of property being appraised and the prevailing market conditions can influence the depreciation rate and calculation methods.
  
  
• Purpose of the Appraisal: The intended use of the appraisal (e.g., financing, tax assessment, insurance) may impact the level of detail and rigor required in the depreciation analysis.

By understanding these factors, you can gain a clearer picture of how reconciled annual depreciation might be used in a specific real estate appraisal.

 

[MRand100]

Ya, I tried that and it took me all over the place. This seems to have been written by someone who was dead long ago. Just like Idaho to keep on keeping on and never revise. Literally, google and youtube don't even have an answer when you plug those 3 words in. Anyhow, I did refresh my memory about how to calculate all forms of deprecation which is learned when a trainee and never used again as the programs normally calculate most of that for you depending on what inputs you use. Thanks y)