No consideration for Cost Approach on a one month old property.

[Mark K]

I'll admit to having used neither the 1004 nor the 1025 forms in well over 10 years. GP form and narrative reports only here. However, the preprinted forms should not be used as an excuse for not completing any of the three approaches applicable to the current assignment.

Bottom line...do the CA or don't, matters not to me. But I will continue to believe that refusing to complete the CA on new construction reflects laziness or incompetence. Nobody says you have to put a lot of weight on it but it should be done for support or at least as a reference in a professionally prepared report.

 

[alebrewer]

I'll admit to having used neither the 1004 nor the 1025 forms in well over 10 years. GP form and narrative reports only here. However, the preprinted forms should not be used as an excuse for not completing any of the three approaches applicable to the current assignment.

Bottom line...do the CA or don't, matters not to me. But I will continue to believe that refusing to complete the CA on new construction reflects laziness or incompetence. Nobody says you have to put a lot of weight on it but it should be done for support or at least as a reference in a professionally prepared report.

I think it's admirable to put so much value on the CA. I think it's arrogant to judge others for how they feel about the value add of the CA.

 

[sputnam]

In a review capacity, we do not pass judgement on the appraiser using words such as lazy or unprofessional. We are reviewing the appraisal, not the appraiser.
Client not requiring an approach is a valid reason, as long as the appraiser believed that when omitting the approach the value opinion is still credibly supported. ( appraiser comments on why omitting the cost approach the appraisal still has credible support for the value opinion from the SCA).

I personally prepare a cost approach on nearly every appraisal and especially will on a newer home, When I am reviewing, my job is to analyze the appraisal I am reading, my job as reviewer is not based on comparing their appraisal to whether I would do it differently or if I think the appraiser was being lazy.

That's right... we don't say 'unprofessional' in a review report. We don't review the appraiser. However, this isn't a review report... it's a forum.

 

[Mark K]

I think it's arrogant to judge others for how they feel about the value add of the CA.

Maybe so.

OTOH, I think a lot of state appraisal boards may be staffed with 'arrogant' members that would come to the same conclusion, i.e., that an appraisal of a new home that lacks a CA does not reach the threshold of a professional report. I can only think of two reasons why an appraiser would leave out a valid approach.

 

[Red Flint]

I can only think of two reasons why an appraiser would leave out a valid approach.

1. Want to go fishing.
2. Good enuf.

 

[Sadie]

Cost data for high end homes is not typically available and not reliable. If the cost breakdown is available or if you have cost data for similar high end custom/semi custom homes, then you might have a reliable data source. And I agree with the OA, that replacement cost is not a concern for this market segment. How many of the high end homes have you seen completely remodeled after purchase? Probably enough to realize that the remaining economic life in the home is no concern at all.

 

[Cob]

it is true appraisal peers typically develop a CA on a newer property even if not a requirement - whether reviewer wants to comment on that idk- we are reviewing the appraisal not the appraiser and we are reviewing the report that exists, not comparing it to an ideal of what we personally would have done-

THANK YOU, THANK YOU, THANK YOU, SO many appraisers do not get this, you are reviewing the report, not what you "feel" should have been done, not only that, but the O.P. felt the need to come onto AF and talk about it, review the appraisal report and get on with your day.

 

[Cob]

Did you read the original comments? I stated; "To add additional contacts, the appraisal was completed for refinancing on a property that had just been finished being built one month prior to the effective date of this appraisal report." If that wasn't clear enough. The subject was built in Dec of 2021 and the appraisal I referring to was completed in Jan. of 2022. The original appraiser reported it was C1 and that the subject has just been built.
Also, I never stated that I disagreed with the original appraiser's opinion. It's the snarky comments on here, as to why I post so little on this forum.
I was simply trying to understand the original appraiser's justification behind their comments, that the Cost Approach is not used, since buyer in this market typically don't rely on depreciated costs to make buying decisions. What depreciation is there for a one-month-old property? In this market segment (new, multi-million dollar, custom-built homes) one could argue, that the typical Buyers in this market segment would consider the cost of building their own home when considering making an offer on a pre-existing home.

While you didn't state that you disagreed with the original appraiser's opinion and that you were, "simply trying to understand the original appraiser's justification behind their comments" You DID feel the need come onto AF, start a new topic and have people comment on it, unless you are new to AF, you know you are going to get some snarky comments from some people, if the snarky comments on here are why you post so little on this forum, (not being rude or snarky here) but you could have simply finished the review appraisal, not started a new topic on AF and moved on and avoided any snarky comments all together.

 

[Joe Flacco]

Is the cost approach applicable? Yes. Is it necessary? Sometimes.

 

[alebrewer]

Maybe so.

OTOH, I think a lot of state appraisal boards may be staffed with 'arrogant' members that would come to the same conclusion, i.e., that an appraisal of a new home that lacks a CA does not reach the threshold of a professional report. I can only think of two reasons why an appraiser would leave out a valid approach.

Fair enough. So what part of USPAP has been violated when the CA isn't developed/reported on an assignment where the CA was not part of the agreed SOW? Remember - in order for a state board to find fault, there has to be a violation of USPAP or state regs...