Construction loan appraisal - cost approach most appropriate?

[Damien McDonald]

Hi guys, when obtaining a construction loan from a portfolio lender for new construction on an empty lot, I would think the cost approach to value would be the most appropriate for the appraisal. I was given an appraisal that solely used sales comps. The comps used were not great, and the appraisal came in below the 80% LTV. Should cost approach be used, possibly a weighted average of cost and comps?

Thanks,

Damien

[Robert Hudson]

Cost approach is only used when there are no available comps. Appraisers tend to be quite conservative when it involves proposed construction because they can't actually see it.