Sales Comparison Grid & Cost to Cure

[Zoe]

Your strict on yourself sometimes Jgrant. Listen to what I am telling you. Cost is an indicator and profit incentive that can be used in sales comparison approach. Sometimes it is the very best indicator of market value.

 

[Terrel L. Shields]

You keep calling costs market data, but costs are not the "market" -

Go look at a text book - JUST ONE GOOD TEXT. They explicitly call it that...period. It is data from the cost market just as income info is data from the income market. I bet your shelf is bare of any text books...USPAP and a handout from a CE is all your "reference" library.

 

[J Grant]

Go look at a text book - JUST ONE GOOD TEXT. They explicitly call it that...period. It is data from the cost market just as income info is data from the income market. I bet your shelf is bare of any text books...USPAP and a handout from a CE is all your "reference" library.

They call it market data but it is not a sales market data and it is not a sales approach. Cost does not equal value is a cornerstone of appraising fundamentals. If cost deualed value, appraisals would use only the cost approach and there would be no need for anything else.

sometimes straight cost is the market reaction but many times it is not.

 

[Terrel L. Shields]

it is not a sales market data and it is not a sales approach

No. But it is a method of making an adjustment - I listed the various methods above. Cost related adjustments are far more accurate than most "paired sales" that rely solely upon one or two "pairs" - Again, if you have truly "paired" some sales for say a pool or fireplace, the variation can be 100% or more between pairs. Those pure pairs where only one item is different between 2 houses? A fantasy of some instructor. So a paired sale has to make multiple adjustments to make the pairs equal and even then only 1 sale or even 2 hardly defines the overall impact. It is just one possible outcome.

 

[George Hatch]

Cost doesn't equal value the same way that income doesn't equal value; but that doesn't make either entirely irrelevant to value in the market as measured by the sales.

You can't develop an Income Approach without data from the sales. Same with the Cost Approach, which BTW consists of more than just a list of the costs.

 

[J Grant]

Cost doesn't equal value the same way that income doesn't equal value; but that doesn't make either entirely irrelevant to value in the market as measured by the sales.

You can't develop an Income Approach without data from the sales. Same with the Cost Approach, which BTW consists of more than just a list of the costs.

Developing a cost approach is not the topic. T got off target with it . The topis is using straight cost as an adjustment on the sales comparison gird in a SCA

 

[Zoe]

Cost doesn't equal value the same way that income doesn't equal value; but that doesn't make either entirely irrelevant to value in the market as measured by the sales.

You can't develop an Income Approach without data from the sales. Same with the Cost Approach, which BTW consists of more than just a list of the costs.

Indicator in sales comp approach if needed. Sometimes best indicator in sales comp approach.

 

[Zoe]

Developing a cost approach is not the topic. T got off target with it . The topis is using straight cost as an adjustment on the sales comparison gird in a SCA

Nobody said that darling.

Fine to do that on cost approach only. Nothing wrong with it.

 

[J Grant]

No. But it is a method of making an adjustment - I listed the various methods above. Cost related adjustments are far more accurate than most "paired sales" that rely solely upon one or two "pairs" - Again, if you have truly "paired" some sales for say a pool or fireplace, the variation can be 100% or more between pairs. Those pure pairs where only one item is different between 2 houses? A fantasy of some instructor. So a paired sale has to make multiple adjustments to make the pairs equal and even then only 1 sale or even 2 hardly defines the overall impact. It is just one possible outcome.

Cost adjustment are only "accurate" in that they can reflect what something actually cost !!

Since that can be off 50% or greater wrong than what the market pays or does not pay in a sale of the property, how can you call that accurate ?

Buyers purchase the total of a property; they do not buy a component. They buy a house that comes with a pool, not a house and then on a separate title for a pool. (sarcasm ) The pool's CONTRIBITRUY value to the whole is the market reaction, seen in the price of the total.

Your lack of understanding about how to drive that is your problem -extraction, talking to RE agents, studying data , and experience lead to a well-supported and credible adjustment.

Adjustments are meant to approximate, the market reaction, and not "accurate" btw.

 

[J Grant]

Nobody said that darling.

Fine to do that on cost approach only. Nothing wrong with it.

keep up - the topic is not the cost approach. The topic is using a straight cost for X as the adjustment in the sales comparison approach.