Podcast: Play in new window | Download (Duration: 10:15 — 10.1MB)
One of the purposes of this podcast is to make you mad. Another is to open your eyes to the power the analytics of the cost approach have to analyze sales. Another is to anger you. About what? About the depth of its questions and what is likely to be the shallowness of your answers to them. With any luck at all, this podcast will do both. If it does, then you’re paying attention. Thank you! If it does not, then I’m not doing a proper job as a USPAP instructor. I’ll need to work smarter to open your eyes.
Again, I want to make you mad. It is clear most appraisers do not like to engage in the analytics of the cost approach. Generally, we are not too familiar with it since most of its protocols are not market oriented. And there is a lot of math involved. Remember that four out of three appraisers do not understand math. The GSEs make it clear that they do not think the cost approach results in a reliable indication of market value. So, it is clear that most appraisers, because of these limitations, do not appreciate the deep analytical power the cost approach really has. Most of us simply do not understand how the protocols of the cost approach help us to come to a credible opinion of market value. Therefore, I’m going to ask you 10 questions on the cost approach and stuff related to it. After we’ve finished with them, you probably will still not like to tackle the cost approach (and for the same reasons). Nevertheless, you just may have a better understanding and appreciation of its powerful analytical capabilities. And remember to keep your E&O Insurance up to date, and understand the need for legal counsel.