Earn More Money Using the Cost Approach
When the new Fannie Mae forms became mandatory last November, it was a relief to know that filling out the cost approach was not a requirement by Fannie Mae. So many appraisers did not fill it out. Some reports went through, but yet others were sent back because of the missing cost approach. Why would this happen if right on the form it states?
Response:
“The appraisal report form on which an appraisal is reported does not dictate the scope of work performed.
The appraiser must identify the appraisal problem and determine the proper scope of work.
If the cost approach is required for credible assignment results, then it must be developed and the results must be included in the appraisal report. If the cost approach is not required for credible assignment results, the appraiser may elect not to complete the cost approach. If it is omitted, the report must explain the omission.
Whether or not the cost approach is necessary is a decision that must be made by the appraiser based on the intended use, intended user, and other assignment elements.”
*Source: http://www.appraisalfoundation.org
What many appraisers are doing; whenever they deem it appropriate to include the cost approach, is to pass on the cost to the client. Some are charging $50 to even $100 more for an appraisal with a cost approach. That’s a pretty good margin considering that a Marshall & Swift transaction in ClickFORMS is only $8.
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