Estate Appraisal: what form?

[Rich Heyn]

Why not, Mike? It is identical to the definition on the GPAR form...

There is no preprinted definition of value on the GPAR form.

 

[The Warrior Monk]

IRS uses "Fair Market Value."

 

[incognito]

There is no preprinted definition of value on the GPAR form.

On the form, no, but there is on the corresponding 2 page GP addendum, which among other things, must include a market value definition. The GP "form" would be incomplete and non USPAP compliant without the addendum (or a similar addendum with assumptions, limiting conditions, scope, certification, AND market value definition). ALL of the GP form appraisals have have used the same definition on them as the one seen on the 1004, but you are technically correct, one could substitute another definition if one desired...

 

[incognito]

IRS definition:

Fair market value. Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. If you put a restriction on the use of property you donate, the FMV must reflect that restriction.

My opinion: This definition is WAY to broad to be used on a REAL ESTATE appraisal, performed by a licensed real estate appraiser. This definition is for ANY property, not just Real Estate. I believe this definition could be abused, allowing an appraiser to skew a value considerably, in either direction, and thus create a misleading appraisal. The 1004 definition:

Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite
to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions
whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised and acting in what they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.

The IRS definition does not consider #3 or #5, both of which are VERY important when presenting any opinion of "value" for a piece of real estate. Therefore, because the 1004 definition includes all of the items in the IRS definition, I feel comfortable using the 1004 definition for estate appraisals of Real Estate, because for a licensed appraiser to report the value (any definition) of Real Estate without consideration of #3 and #5, would in my opinion be non USPAP compliant, in that it could be very misleading... (among other things), and just because it is for the IRS does not mean we can invoke some sort of Jursidictional Exception from USPAP requirements.

Just my opinion. I would like to hear others...

 

[Rich Heyn]

On the form, no, but there is on the corresponding 2 page GP addendum, which among other things, must include a market value definition. The GP "form" would be incomplete and non USPAP compliant without the addendum (or a similar addendum with assumptions, limiting conditions, scope, certification, AND market value definition). ALL of the GP form appraisals have have used the same definition on them as the one seen on the 1004, but you are technically correct, one could substitute another definition if one desired...

Perhaps we're talking about different forms from different vendors. You stated that Fannie's MV definition was "identical to the definition on the GPAR form." GPAR is ACI's trademarked name for our family of general purpose appraisal forms so I assumed that was the form to which you were referring.

ACI's GPAR form has data fields that allow that appraiser to identify Market Value or Other Value (and state what type of Other Value applies), cite the source of the definition and then enter whatever definition the appraiser feels is appropriate for the given assignment. I intentionally designed it that way to make it as flexible as possible. This thread is a good example of how different types and definitions of value are important considerations when appraising for non-lending uses.

 

[incognito]

I'm sorry, Rich. I made the error of assuming that GPAR was a generic term. I stand corrected.
The GP form I use has a market value definition pre- "typed" in it, and it can be removed or changed. As you state, it is not a part of the form, but the form author's entry, along with other standard entries like limiting conditions and certifications, which too can be changed or deleted.

 

[Rich Heyn]

I'm sorry, Rich. I made the error of assuming that GPAR was a generic term. I stand corrected.
The GP form I use has a market value definition pre- "typed" in it, and it can be removed or changed. As you state, it is not a part of the form, but the form author's entry, along with other standard entries like limiting conditions and certifications, which too can be changed or deleted.

Nothing to be sorry about. A number of posters have used GPAR in a generic sense. No big deal.

 

[Mark to market]

The Appraisal Institute has a form which will work well, it is the AI-100. Most vendors have it.

 

[Flygirl 152]

I have used the GPAR for at least 2 Estate Appraisals that have went to the IRS. The most recent one was about 9 months ago.

I've also used the GPAR for about a half dozen of private appraisals in which the owner was trying to decide a list price for the house before hiring a real estate agent.

 

[incognito]

The Appraisal Institute has a form which will work well, it is the AI-100. Most vendors have it.

And, it too has the same definition of market value as the 1004 (which is the definition published in the Appraisal Institutes DICTIONARY OF REAL ESTATE APPRAISAL. The definition is on the form, but has the option of using an alternate definition.