"As Is" market Value vs. "As Is" market value to a single purchaser

[annek]

I am reviewing an appraisal of the remaining condominium units within a large project. The appraisal included an "As Is" market value of the property to a single purchaser. Does this market value estimate differ from an "As Is" market value? "As Is" market value is the terminology I am accustomed to seeing. I am wondering if the "As Is" market value to a single purchaser would represent an investment value, and not market value. An insight provided would be appreciated.

 

[Ken B]

It appears that the problem may simply be one of semantics. See my next post.

 

[The Warrior Monk]

The appraisal included an "As Is" market value of the property to a single purchaser. Does this market value estimate differ from an "As Is" market value?

"As Is" market value of the property to a single purchaser is not "market value." Market value has a specific definition, and the qualifier simply means the value sought is no longer market value.

Market Value is not the only type of value, hence the reason why identification of the value type is part of the Scope of Work. There are value types that deal with value to a specific individual, esp. Investment Value. However, there are other types that may be applicable, such as Use Value.

 

[xyzpdq0121]

Do you mean he appraised all the units as if they were to be purchased by one person?!?

I would take that to me an investor value.. or something other then market value! Seems to me that some sort of discount might have been applied to the whole... (for example: 20 units x $200,000 per unit - 15% investor profit = $3,400,000) Now, I would like to see what comparables they utilized to determine that type of value. Now, SOMEWHERE in that appraisal there should be a comment as to what his "as-is" value means and how he derived the vcalue... If there is not, then there is your first, of maybe many, appraisal flaws!!

 

[BRCJR]

It is not my intent to offend, but in asking this question, you reveal that you are not qualified to review the appraisal. This is not your fault. It is simply a fact. Please, please, please arrange for the appraisal to be reviewed by someone qualified to do so.

It appears this is a review for an employer, as their status indicates non-appraiser. The verbiage appears to be one that is reflective of a development purchase price. I will guess the appraisal is a commercial appraisal with DCF.

 

[Ken B]

"As Is" market value of the property to a single purchaser is not "market value." Market value has a specific definition, and the qualifier simply means the value sought is no longer market value.

Market Value is not the only type of value, hence the reason why identification of the value type is part of the Scope of Work. There are value types that deal with value to a specific individual, esp. Investment Value. However, there are other types that may be applicable, such as Use Value.

Bzzzzz...no cigar for you.

Both...scratch that...everyone who does not know the answer please review this information. Especially the second paragraph of FAQ #9.

http://www.FDIC.gov/news/news/financial/2005/fil9005a.html

Edit: I think the confusion may be the "to a single purchaser" part of the statement. I have seen this comment previously; it's intent is not to imply value to a "specific purchaser", but to identify that the market value of the entire portfolio is to a solitary purchaser as opposed to multiple purchasers of individual units. Market value of the portfolio to a solitary investor is less than the aggregate sum of the market values of the individual units for the basic reasons provided in the link. One could think of the market value of the individual units as a retail value and the market value of the entire portfolio as a wholesale value. Appraisers have had their hands slapped hard when reporting the aggregate sum of the individual unit market values as the market value of the entirety. Even when the client's direction was to use an HC that the aggregate market values was the market value of the entirety. It is grossly misleading to do so.

Additional edit: "Investment value" could be to multiple specific purchasers, no?

 

[Michigan CG]

............ Now, SOMEWHERE in that appraisal there should be a comment as to what his "as-is" value means and how he derived the vcalue... If there is not, then there is your first, of maybe many, appraisal flaws!!

I completely agree with this statement. That value should be very specifically defined. I would also think with this type of assignment there would be a lot of narrative explanation.

definition of value
A written statement specifying the type of value to be estimated; must be included and/or referenced in every appraisal report.

 

[Ken B]

I completely agree with this statement. That value should be very specifically defined. I would also think with this type of assignment there would be a lot of narrative explanation.

You betcha, especially if a self-contained report, which there is a good chance it may be.

 

[LACKLAND27]

1- What format is the appraisal in? Is it a narrative, or a form 1004, 1073 etc?
2- If it's a narrative there should be 2 values noted. the "Gross sell off" and the "discounted bulk sale" which is the sale of all units to a single buyer. This is generally discounted 20-30% off the "gross sell off" value.
3- If this is done on a form by a certified residential appraiser it is a worthless appraisal since a) certified residential cannot do sub-divisions, and b) it should be done in a narrative format.

 

[BRCJR]

1- What format is the appraisal in? Is it a narrative, or a form 1004, 1073 etc?
2- If it's a narrative there should be 2 values noted. the "Gross sell off" and the "discounted bulk sale" which is the sale of all units to a single buyer. This is generally discounted 20-30% off the "gross sell off" value.
3- If this is done on a form by a certified residential appraiser it is a worthless appraisal since a) certified residential cannot do sub-divisions, and b) it should be done in a narrative format.

I think your number 2 may be incorrect. Federal Bank Regulations say there is to be an "as is" value also. I cannot remember exactly, but think it is in REG Y somewhere.