Reconciliation of Approaches

[Kathleen Hayes]

Can the approaches be reconciled in one or two sentences? How far does one need to take the quality/quantity and applic. and relevance, methods and techniques. How brief can this be...or how long should it be. Brian Underwood from the NH Real Estate Appraiser Board states that, "These requirements in USPAP cannot be accomplished in one or two sentences". Is this just opinion, I know it's not in USPAP...how can HE state it can't be done. Is this in fact a violation of USPAP in itself?

Thanks,
Kathleen

 

[CANative]

Reconciliation is the re-examination of the appraisal. Simple assignments may not need more than a sentence of two, especially when only a single approach has been developed. More complex assignments and those where more approaches were necessary may need much more than a couple of sentences.

 

[Don Clark]

Ask him if the following fits the requirements for reconcilliation within USPAP:

"The sales comparison approach to value is the most reliable approach to value given the client requirements, the scope of work, intended use, and intended users. Appraiser has considered the cost approach and income approach to value and find they are nor attplicable or necessary to the assignment."

If not, why not.

 

[CANative]

find they are nor attplicable

It's difficult to think of a scenario in which the IA and CA are "not applicable."

 

[Don Clark]

It's difficult to think of a scenario in which the IA and CA are "not applicable."

I will give you a few:

1. Not an income property.
2. Not new construction.
3. Not required by the scope of work.
4. Lender is going to base a loan on market value, not cost or income.

Is that enough? I know, you ALWAYS do the income and cost approach....right?

 

[CANative]

Those are all applicable (capable of being applied).

And yes. I always do all three approaches. I just don't present them.

 

[Don Clark]

Those are all applicable (capable of being applied).

And yes. I always do all three approaches. I just don't present them.

And, I don't believe you. They are not applicable. They are not required and would serve no purpose.

Not applicable:

impracticable, impractical, inapplicable, nonpractical, unusable, unworkable, useless

 

[CANative]

I'm just saying it's not a good habit to state an approach is "not applicable" just because it is difficult. For almost all of the assignment types that get discussed in the forum (with the exception of the commercial section) it's a bad idea to casually state that an approach is not applicable. For virtually all residential assignments all three approaches are capable of being applied.

 

[Mr Rex]

CA you missed one of the definitions of applicable: relevant

 

[CANative]

Applicable/Not Applicable is not even in USPAP anymore so why do we have to consider relevant? Residential property is capable of producing income and there is always a cost involved in developing it.