To have a podcast on The Cost Approach and USPAP.  How exciting (not)!  You’re right.  This is not exactly the conversation you’ll have when you get together with friends.  Even if those friends are other appraisers!  But the point is the cost approach is an untapped resource.  It is the sunshine to which appraisers typically do not expose their analytics.  This is a shame, really, since this approach can tell us so much about the quality of our analytics via the other approaches.  How so?

We all know that in older neighborhoods, there are likely to be few vacant site sales.  This is where we appraisers can put the cost approach and USPAP to good use.  This absence of data makes adjusting for site differences such as size, view, access, shape, etc. difficult to extract from the market. But you can use improved sales data to extract comparable site values.  That takes a little practice and training, true, but once you master that protocol, life as an appraiser becomes easier.  And, reports go out the door a little faster.  Who doesn’t want to produce more reports, thus greater cash-flow, right?

And what are the advantages to appraisers who understand the cost approach and USPAP?  More than you think, frankly!  But the eye-opener is that as we come to understand the cost approach, then begin to use it properly, our clients are less motivated to hire AVMs and BPOs.  Therefore, they are more prone to hire us, since we provide services and insights that the other tools simply cannot.  So mastering the cost approach should not be a chore.  Instead, let’s look at it as the opportunity to become even more indispensable.  Let’s seize the opportunity to become even more professional than we are today!