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Review question about cost approach

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Aletheia

Freshman Member
Joined
Feb 29, 2008
Professional Status
Licensed Appraiser
State
Indiana
Im doing a field review and the original appraisal has an "as-is" value of the improvements as $8,000.00. however he does not list the improvements or value as new he is giving value to further up in the cost approach, are the improvments required to be listed. I put the improvements and value there, but I wasnt sure if its required by USPAP. I appreciate your help

Example

Site: 35,000
Dwelling:2330 @ 95.00
Bsmt:0
this line is blank w/no value
garage/carport:[email protected]
Depreciation:16,031
Dep. cost of improvements 224,444
as is value of improve. 8000

Value by cost approach 267,400
 

Scott Kibler

Elite Member
Joined
Oct 7, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
It might be a good idea to brush up on the ole USPAP if you are reviewing appraisals for compliance with it. Make sure you have copies of the appropriate USPAPs to correspond with the effective dates of the reports you are reviewing.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
Sometime to avoid the questions about where in the sam heck the numbers come from, the numbers are left out and just the value is entered.

We are required to show how we arrived at a number and where our source is so someone like you can go to that source and duplicate the inputs and come up with a similar number.

Evidently this appraiser didn't want anyone to know where he pulled their numbers from, it's usually from a part of their anatomy lower than the lower back...!!

Standards 2-2b (viii) is written as follows:

"summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained;"



Comment: A Summary Appraisal Report must include sufficient information to indicate that the appraiser complied with the requirements of STANDARD 1. The amount of detail required will vary with the significance of the information to the appraisal.



The appraiser must provide sufficient information to enable the client and intended users to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches, in accordance with Standards Rule 1-6.


So you have to complete the approaches to value properly as per Standards Rule 1.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
$8,000 does not sound like a high number for "as is" value of site improvements. When you consider this could mean fencing, driveway, landscape, porches, patios, lawn sprinkler, etc. Heck, I include the pool in the "as is" value of site improvements, too. It all depends on the market, age of the home and physical plus functional depreciation.

As a reviewer, how do you prove this number is wrong? I would be more apt to run lot sales to verify lot value and check to see if the numbers can be replicated by the Marshall & Swift Residential Cost Handbook.

You would be surprised how many appraisers (and reviewers) don't even have a copy of the M & S. They were trained to pull cost figures out of the air.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
It doesn't really matter what the number is or whether or not it is right or wrong. There is a deficiency in the scope of work which requires sufficient data to allow the client to replicate.

If you're going to do a CA on a FannieReport, do it right.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
It doesn't really matter what the number is or whether or not it is right or wrong. There is a deficiency in the scope of work which requires sufficient data to allow the client to replicate.

If you're going to do a CA on a FannieReport, do it right.

I agree. Fannie never should have put that little section on the form. It requires a 1007 sf form or similar to be remotely credible IMHO.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
It doesn't really matter what the number is or whether or not it is right or wrong. There is a deficiency in the scope of work which requires sufficient data to allow the client to replicate.

If you're going to do a CA on a FannieReport, do it right.

Am I understanding you right? There is a guideline that the information I put in my report is detailed enough to let the client replicate my work?

Must I then include all my textbooks for the zillion courses I have taken and copies of all my previous appraisals as well?

I am going to need chapter and verse on this. If you have it, I will certainly begin to do so, but I will be honest, I do not include the cost figures breakdown for AS IS value of site improvements(as is value has nothing to do with cost anyway).

I may be in need of some re-education here, and I am willing to admit it.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Larry its pre-printed on the form.
 
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