What is super adequacy?
Per The Dictionary of Real Estate Appraisal, 6th Ed., superadequacy is defined as “an excess in the capacity or quality of a structure or structural component; determined by market standards.” Superadequacy is a type of functional obsolescence, as the structure or one of its components is at a greater capacity or …
What is an over improvement appraisal?
An over-improvement is an improvement that is larger or costlier than what is typical for the neighborhood. For example, a 4,000 square foot home located in an area of homes where the typical home is 2,000 square feet may be considered an over-improvement.
What is an economic obsolescence?
Economic obsolescence (EO) is the loss of value resulting from external economic factors to an asset or group of assets. EO is often encountered in valuation work performed for financial reporting purposes, bankruptcy emergence and in other practice areas when dealing with companies in capital-intensive industries.
What is a functional obsolescence?
Functional obsolescence is the reduction of an object’s usefulness or desirability because of an outdated design feature that cannot be easily changed or updated. The application of the term varies based on industry.
How do you find functional obsolescence?
Calculating Functional Obsolescence in Cost Approach Regarding a functional obsolescence deficiency that lacks something, the calculation is the difference between the reproduction cost with the curable item and without it, as of the date of appraisal. Note that this is reproduction cost and not replacement cost.
Is a Pool A functional obsolescence?
If a house has a swimming pool that is smaller in size compared to those found in the other homes in the neighborhood, this deficiency or decline in usefulness can contribute to the property becoming functionally obsolete.
What does an over improvement property suffer from?
An over-improvement or under-improvement indicates lack of conformity and usually suffers some degree of loss in value.
What is it called when you over improve your home?
Over-improving can be counter-productive at house-flipping Your objective is to make impactful home improvements to the property and then sell it for a profit. We call this practice house-flipping.
What is incurable depreciation?
Incurable Depreciation is a defect in an asset, making it too costly to fix.
What is puffing in real estate?
Puffing is an exaggeration of a fact. Many agents are guilty of puffing when showing a house. We have all heard agents say, “MAN! This is enormous,” where they’re not quite lying, but close. Who knows, maybe it is the biggest house the agent has ever seen-but more than likely the agent is exaggerating to create a sale.
What is the difference between functional obsolescence and economic obsolescence?
Unlike functional obsolescence, which occurs within a property, economic obsolescence occurs outside the property and is beyond the control of the property owner. This means that the property is incurable because it would be too expensive to cure the problem.
What is Super adequacy in real estate?
What is superadequacy? Per The Dictionary of Real Estate Appraisal, 6th Ed., superadequacy is defined as “an excess in the capacity or quality of a structure or structural component; determined by market standards.”
What is an example of a superadequate custom fireplace?
Accounting for a superadequacy Example #1: Superadequate custom fireplace Let’s say an appraiser is reviewing the prints and specs of a proposed residential home construction, in which a two-story masonry fireplace is proposed to be added to the residence’s office and the cost estimate is $42,000 for the materials and installation.
Can an appraiser develop the reproduction cost of a Super adequacy?
The presence of a superadequacy should not alone preclude an appraiser from developing the reproduction cost, especially when completing the cost approach for proposed construction.