Developed with Xactware Data and Technology April 2015
Contents Introduction... 2 Actual Cash Value (ACV)... 2 Depreciation Based Upon... 2 Age and Condition of Structure Based... 3 Percentage Based... 3 Manufactured/Mobile Depreciation... 3 1
Introduction Introduction 360Value offers an actual cash valuation feature. Actual Cash Value (ACV) is a company preference that can be hidden or displayed for any of the valuation types (1 to 4 Family, Condominium Interior Unit or Upgrade Only, Manufactured/Mobile, Commercial, and Agricultural). Actual Cash Value (ACV) Users can click the Calculate ACV option on the Results page to calculate actual cash value (ACV) for a valuation by depreciating the replacement cost value. The Actual Cash Value displays on the Results page and on reports. Permits, architects fees, sales tax, and overhead and profit, are calculated independent of labor and materials ACV, and are added afterward to arrive at the total Actual Cash Value amount. For example: Cost Items Replacement Cost Value Actual Cost Value Total costs material and labor $100,000 $75,000 Sales tax (6% on material) $3,000 $2,250 Architect Fees (3%) $3,000 $2,250 Overhead and Profit (20%) $20,000 $15,000 Total $126,000 $94,000 Depreciation can be calculated based on the age and condition of the structure or a depreciation percentage and is based on the answers entered in the Calculate Actual Cash Value pop-up window. Depreciation Based Upon When the company preference is set to display the Depreciation Based Upon question, users can also select to depreciate based on either "Materials, Labor and Overhead, and Profit" or "Materials Only." (For example, in California only materials should be depreciated.) Please note that overhead, profit, and labor do not apply to all modules or Use types. Profit is not included in some Commercial Use types or any Agricultural valuations. Additionally, Manufactured/Mobile valuations do not include overhead or profit because they are valuated as factory built commodities. The factory assumes all costs associated with the commodity. Therefore, these items are not used in 2
Age and Condition of Structure Based depreciation calculations, regardless of company preference settings. For more information on pricing components, see the 360Value Product Overview white paper. Age and Condition of Structure Based The straight line depreciation method calculates ACV based on the age and condition of a structure. By default all components, including materials and labor, in the structure are depreciated at the same rate. "Materials Only" can be selected when the Depreciate Based Upon question is displayed. The age of the structure is determined by the Year Built entered. It is then factored based on the Condition selected in the Calculate Actual Cash Value pop-up window. There are three condition types to select from: Average, Good, and Excellent. The factors used based on age are 1.0,.85, and.70 respectively. For example, if a structure is 20 years old and in Good condition, the age is multiplied by the factor to calculate an effective age (20*.85 = 17yrs old). In this case, the age of 17 is used in the straight line depreciation calculations. If the structure has been significantly remodeled since its original construction, enter the Effective Age, or number of years since the remodel. 360Value then uses this Effective Age rather than the Year Built when calculating Actual Cash Value. Percentage Based The ACV total is calculated based on the percentage entered. The percentage of the total replacement cost is subtracted from the replacement cost. For example, $100,000 - ($100,000 x 10%) = $90,000 ACV. By default, all components (including materials and labor) in the structure are depreciated. "Materials Only" can be selected when the Depreciate Based Upon question is displayed. When the company preference is set, 360Value does not calculate depreciation for a structure beyond the maximum depreciation specified. For example, if the company preference is set to a maximum depreciation of 75% and 80% is entered into the Percentage field when calculating ACV, 360Value displays a message that the maximum depreciation is 75% and returns the user to the Calculate ACV window. Manufactured/Mobile Depreciation When ACV is calculated for a Manufactured/Mobile valuation, two sources are used the NADA Appraisal Guides, Inc. data and 360Value depreciation methods. The base structure s value is depreciated using information from NADA Appraisal Guides, Inc., which includes the depreciated replacement value, current year retail value, installation/set-up costs, and traditional retailer mark-up. Additional features not included in the base structure value are depreciated using 360Value. Additional Structures depreciate based on the type of depreciation chosen and data published by Xactware, Inc. For information on Xactware, Inc. pricing methods see Pricing Validation and Procedures. 3
Manufactured/Mobile Depreciation Insurance Services Office, Inc., 2015. ISO, the ISO logo, and 360Value are registered trademarks and Verisk, Verisk Insurance Solutions, and the Verisk Insurance Solutions logo are trademarks of Insurance Services Office, Inc. AIR Worldwide and the AIR Worldwide logo are registered trademarks of AIR Worldwide Corporation. Xactware is a registered trademark of Xactware Solutions, Inc. All other product or corporate names are trademarks or registered trademarks of their respective companies. U003 (3/14) z14083 4