Cost Approach- Contemporary Issues
- Submitted by: kingsmel
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- Category: English
- Date Submitted: 09/21/2011 06:57 AM
- Pages: 9
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Cost Approach- Contemporary Issues
Issue:
When must an appraiser do the cost approach?
A: The first factor is in the Scope of Work decision. This decision is a result of communication with the client. Did the client ask for it? If yes, it is required since it would be part of the scope of work requested.
B. Within that agreed upon scope, is it necessary to produce a credible opinion of value? If yes, then it must be done even if the client agrees that they do not need it.
Issue:
May I or should I charge and additional fee for doing the cost approach?
It depends. What was your original agreement with the client? If they do want it, why do they want it? Did you cover this in your assignment conditions? Is this a regular client for whom you normally produce the cost approach?
Essentially, the answer is basically a business decision for the appraiser. It results from direct communication and negotiation with the client.
Some appraisers are charging extra for it while others are not. The typical client today will not pay more for it. Therefore, charging extra for it may well cause the client to seek an alternate vendor for that assignment. However, this is a question that can truly only be answered by the individual appraisal firm.
Issue:
How can an appraiser determine the appropriate value for a site in an area that is nearly fully developed?
There are a few techniques. Many of them are covered in the basic appraisal courses. However, since so many appraisers do so few land appraisals, many have forgotten or never even learned the techniques.
First, one must answer the question of whether or not the area is really totally developed. Often, this is an assumption that does not turn out to be true. Many areas, even in what we might automatically assume are fully developed neighborhoods, still have some vacant land available for sale. So, the first step is to actually check!
Once you know it really is, there are two primary...
Issue:
When must an appraiser do the cost approach?
A: The first factor is in the Scope of Work decision. This decision is a result of communication with the client. Did the client ask for it? If yes, it is required since it would be part of the scope of work requested.
B. Within that agreed upon scope, is it necessary to produce a credible opinion of value? If yes, then it must be done even if the client agrees that they do not need it.
Issue:
May I or should I charge and additional fee for doing the cost approach?
It depends. What was your original agreement with the client? If they do want it, why do they want it? Did you cover this in your assignment conditions? Is this a regular client for whom you normally produce the cost approach?
Essentially, the answer is basically a business decision for the appraiser. It results from direct communication and negotiation with the client.
Some appraisers are charging extra for it while others are not. The typical client today will not pay more for it. Therefore, charging extra for it may well cause the client to seek an alternate vendor for that assignment. However, this is a question that can truly only be answered by the individual appraisal firm.
Issue:
How can an appraiser determine the appropriate value for a site in an area that is nearly fully developed?
There are a few techniques. Many of them are covered in the basic appraisal courses. However, since so many appraisers do so few land appraisals, many have forgotten or never even learned the techniques.
First, one must answer the question of whether or not the area is really totally developed. Often, this is an assumption that does not turn out to be true. Many areas, even in what we might automatically assume are fully developed neighborhoods, still have some vacant land available for sale. So, the first step is to actually check!
Once you know it really is, there are two primary...