Question regarding Cost Approach!

[Fred]

Fear not Steven, his aim wasnt true ... not even a mark on your wet suit.

It's not fear.

The main point is that systematic error should be fixed. If you said your sales comparison is always low on condos and always high on houses, who wouldn't say you were doing something wrong? However, you don't see the same common sense rules applied to the cost approach. IMO, it is major problem with appraisal education that the "bunk" factors involved in the cost approach are not taught and people end up like Stefan, defrocked on the basis of myths.

 

[PropertyEconomics]

It's not fear.

Well it sounded better than ... Be ****** not ........

 

[stefan olafson]

Steven,

That was the basis for the board to turn down my application! The other part they looked at was their opinion I didn't adequately support a market rent for the subject property, even though I stated in the report numerous times the property had never been rented and there was very little to no market evidence on rents for this particular type of property.

Three months prior to my hearing an appraiser from the same town as I was dinged by a reviewer for the exact same violation and he got his license?

 

[incognito]

Avoiding the waters would have meant avoiding the personal dig, right?

Nah, SS, you must have a persecution complex. No personal dig intended. There would have been no mistaken if that were my intention. You are much to big and easy of a target to possibly miss! Bottom feeders usually are...
I simply did not feel like initiating (another) debate with you on the same tired old issues, while yet tying to add a constructive input to the thread. I KNEW you would be lurking there, and I was right! And once again I ask, what have YOUR constructive additions to this thread been? Once again, I do not expect an answer...
Go back to the bottom, Santora, and wait to pounce upon the next cost approach thread that pops up, so you can side track it like you always do.

 

[Fred]

Nah, SS, you must have a persecution complex. No personal dig intended.

Sure, being singled out to be equated with a pirana is real honor. And now, you have throw in another dig - I am suffering from a persection complex.

Go back to the bottom, Santora, and wait to pounce upon the next cost approach thread that pops up, so you can side track it like you always do.

No personal dig there either.

You just can't stop, can you?

 

[John Hassler]

Besides EI, does anybody consider the cost of carrying the project from land purchase to completed home?

 

[Mztk1]

The costs of planning and the preliminary concept layout including the entrepreneurial incentives associated with it are not included in the M&S. But this will be tied up in the pricing of the lots.

I guess what I only meant was that profits are included in the cost figures of the M&S, but technically they are not "entrepreneurial profits".

My bad (again).

 

[Terrel L. Shields]

Now you're telling me E.P. is a fanciful concept someone pulls out of the air based on the differences between the two approaches? I'm confused

Prior to say 1972 when some learned professional argued for such a blue sky adjustment, it was never mentioned in any literature. Dr. Kinnard siezed upon it the true white light of appraising and its been "fact" ever since. Nevermind that it only started appearing in textbooks about the same time that USPAP was being developed. I have textbooks - agricultural ones in particular - that didn't mention EP even in the 1990's editions. Now it is gospel..and renders the Cost Approach meaningless. Dr. Graaskamp called it a filler between cost of production and sales....which he certainly didn't agree with. It disappears the instance a market changes....So...the builders making the big bucks?...Went from 40% profit margins to simply building houses to cash flow into better times (negative EP???)

EP is a bad concept and needs dropped. Blue sky is blue sky. "Soft costs" are not to be confused with EP. Builders profit, permits, etc. are what M & S includes.

 

[Joyce Potts]

Local builder's cost - I keep a cost file right on my desk and every time I get a cost breakdown from any 'proposed construction' appraisal assignment, I make a copy and keep it. I've also kept THE SAME in house general contractor and engineer on retainer for the last 31 years. I know that may shock many of you.

 

[Mztk1]

These days, 31 years with the same person is shocking unless you are counting in dog years.

My wife and I got 21 together and we feel like the freaks in the neighborhood.

(Oh wait, we are the freaks in the neighborhood.)