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No Expenses Provided for Proposed Construction

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ZZGAMAZZ

Thread Starter
Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Assignment is proposed construction avg quality custom SFR--compatible with zoning, no surplus/excess land/nothing out of the ordinary.

Client is MB who is also the contact person for the assignment, who does not know if I will be required by the lender to provide the builder's cost break-down, and who cannot, or prefers not to, provide them to me.

It's my plan to develop the SCA and also the CA. The latter will include an analysis of vacant land, with M&S and local builders' concensus used to determine the sqft costs of construction.

Would it be appropriate/logical to develop both approaches but to prioritize the SC approach above the CA because of the absence of specific cost data, and to describe my rationale in the reconciliation? Or would this run the risk of usurping the report because the quantity and quality of data necessary to complete the report is lacking.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Would it be appropriate/logical to develop both approaches but to prioritize the SC approach above the CA because of the absence of specific cost data, and to describe my rationale in the reconciliation? Or would this run the risk of usurping the report because the quantity and quality of data necessary to complete the report is lacking.

To the bolded, I say "yes".
Unless you determine a credible cost approach is necessary, or, if you determine the SCA is not credible by itself.
 

George Hatch

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Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
The lines in USPAP that deal with this question are in SR1-2.v:

"When appraising proposed improvements, an appraiser must examine and have available for future examination, plans, specifications or other documentations sufficient to identify the extent and character of the proposed improvements."

Most appraisers have considered the cost breakdown to be relevant, but it isn't always available. For instance, when appraising a partially completed construction project involving an MIA contractor those costs often won't be available, or if they are, won't be relevant any longer because a different contractor coming in will have their own cost estimates.

Rather than worrying about what your client wants, you should be asking who your intended users for this appraisal assignment are, and what they require. I'll bet you a buck they'll require a review of the cost breakdown whether the MB wants it or not.

If you don't ask you can't know.
 

ALLEN3686

Sophomore Member
Joined
Jul 5, 2007
Professional Status
Certified Residential Appraiser
State
New York
There numbers are inflated anyway. Use your own. I bet it reconciles with the market.
 

ZZGAMAZZ

Thread Starter
Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Thanks for the range of perspectives.

I do have the blueprints but no cost breakdown.

It's also interesting that in this well-improved, unincorporated area known as "El Cerrito" less than 1/2 mile from incorporated Corona, CA (relatively well-heeled community) the volume of 5000 - 15000 sqft vacant residential land sales has decreased from 10 - 15 during Q1, Q2, and Q3 of 2007 to virtually none during Q4 of 2007. I'll describe this in the Market section of 1004 p 1 as well as the site analysis section of the CA. The absence of sales must have a downward impact on value, although the number of active listings also has decreased.
 

Ty Sutton

Sophomore Member
Joined
May 5, 2006
Professional Status
Certified General Appraiser
State
North Carolina
With the market today... I would definately consider the SCA...

Cost doesn't = value....
 
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