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The Cost Approach: Unnecessary or Vital to a Healthy Practice?

12/7/2018, 8:30 AM - 4:30 PM
Location: Bismarck, ND
Contact: Debbie Ellerton

The Cost Approach: Unnecessary or Vital to a Healthy Practice?

 

The participants in the secondary market often suggest to residential practitioners that the cost approach is unnecessary for credible assignment results, or at least is not relevant to valuing a 1-4 unit property. This is highlighted in the Fannie Mae Selling Guide, as one example, where the cost approach is only required for the valuation of manufactured homes. Unfortunately, this mindset will often limit the potential professional growth and diversity of an appraiser, and leave him or her ill-prepared for the atypical assignments that would otherwise grow and strengthen their practice. More importantly, a decline in the day-to-day use of the cost approach leaves a residential appraiser with an incomplete ability to properly support adjustments in the sales comparison approach, to understand trends in market conditions that are often driven by building costs, and to recognize and quantify the forms of depreciation that can affect residential improvements.

 

Appraisers often repeat that “cost doesn’t equal value”. By the same token, failure to truly understand the cost approach limits the value of an appraiser to his or her clients. Through a combination of lecture and case studies, this 7-hour seminar will allow residential appraisers to regain and/or strengthen their proficiency with the cost approach so that they can rely on its indications when they have plentiful market data, very little market data, or confusing market data.

2018-12-07 08:30:002018-12-07 16:30:00America/ChicagoThe Cost Approach: Unnecessary or Vital to a Healthy Practice? The Cost Approach: Unnecessary or Vital to a Healthy Practice?   The participants in the secondary market often suggest to residential practitioners that the cost approach is unnecessary for credible assignment results, or at least is not relevant to valuing a 1-4 unit property. This is highlighted in the Fannie Mae Selling Guide, as one example, where the cost approach is only required for the valuation of manufactured homes. Unfortunately, this mindset will often limit the potential professional growth and diversity of an appraiser, and leave him or her ill-prepared for the atypical assignments that would otherwise grow and strengthen their practice. More importantly, a decline in the day-to-day use of the cost approach leaves a residential appraiser with an incomplete ability to properly support adjustments in the sales comparison approach, to understand trends in market conditions that are often driven by building costs, and to recognize and quantify the forms of depreciation that can affect residential improvements.   Appraisers often repeat that “cost doesn’t equal value”. By the same token, failure to truly understand the cost approach limits the value of an appraiser to his or her clients. Through a combination of lecture and case studies, this 7-hour seminar will allow residential appraisers to regain and/or strengthen their proficiency with the cost approach so that they can rely on its indications when they have plentiful market data, very little market data, or confusing market data. Bismarck, ND
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