Please comment regarding the Contract Price being higher than the Appraised Value.

[George Hatch]

In addition to the direct comparables above I also analyzed a number of other less directly comparable sales data. After consideration of their respective differences most of these other sales generally support the value trends demonstrated above. My opinion of value as a reasonable range is between $200k - $210k.

The subject's contract price of $220,000 slightly exceeds the upper end of that range of value by about 5% and is not supported by any of these direct comparables. It's possible that certain exceptionally motivated buyers might choose to pay the higher price. However, my opinion of value is based on an assumption of the actions of the "typical" buyer, not the atypical buyer.

 

[J Grant]

Well said, George...

The lender shouldn't even be asking, but if they do, that is a well phrased answer and of course more polite than they deserve.

 

[PropertyEconomics]

The lender should not have to ask. Part of the appraisal process is to analyze avaiable contracts ... if there is a difference, high or low, between the final opinion of value and the contract price it should be discussed in the reconciliation of value.

And the client ALWAYS deserves professionalism from the appraiser .. ALWAYS!!

 

[incognito]

I prefer to speak with market evidence than "justification" talk. If the market is increasing, certainly, a well presented listing and pending analysis will support it. I often put MORE emphasis on my listing/pending analysis than I do my comparable sale analysis. Your verbiage is good, but if you can illustrate that there are NO comparable properties available for sale near the opinion of market value, it speaks volumes.

 

[J Grant]

I don't think the reconcilliation of value is the appropriate place to comment on any difference between contract price and value opinion, if the appraiser comments at all.

Analyzing the subject contract pertains to explanation of matters such as if prevailing terms are present and if there are any concessions or terms. It does not mean the contract price is a value influence that needs to be discussed, especially in a value reconcilliation . An appraiser is not supposed to appraise to a perdetermined value, therefore discussing why there is a variance between contract price and value opinion might be construed as such.

If an explanation is asked for, in the addendum might be a place the appraiser can place comments. I never provide an explanation in the report if contract price and value opinion differ, and rarely have been asked to provide comments in a report.

 

[Tim The Enchanter]

The opinion of market value is significantly below the contract price. Based on the comparable sales and listings as shown herein, the $590,000 contract price is above market value.

Cut and paste from a recent appraisal where my opinion was $535,000. I also mentioned in my addendum why I did not use much newer homes up the hill. Of course they came back with "comps" from the other side of the golf course that were somewhat newer, and of course sold higher. To which I responded basically, that if I used those it would support $535 not $590. I just laughed at the comparison of a 1 1/2 acre horse property to my tract house on 10k SF or whatever.

 

[hglenbetts]

why was the contract higher than my opinion of value?

From the recent report where they asked me the stupid question...

Regarding the fact that the opinion of value contained in this report is lower than the contracted purchase price.. 32 transactions that closed over the past 12 months were considered and this appraiser has utilized the most recent, most similar, closest comparable properties in determining value.

My opinion of market value is the most probable price the subject should sell for and is consistent with the Definition of Market Value.

I am unaware of the motivations behind the buyer's desire negotiate the price they did, so I can not comment on why the purchase price is above Market Value.

 

[J Grant]

My opinion of market value is the most probable price the subject should sell for and is consistent with the Definition of Market Value.

I am unaware of the motivations behind the buyer's desire negotiate the price they did, so I can not comment on why the purchase price is above Market Value.

Very well said!

 

[HF Mudd]

Based on the principle of substitution and the availability of reliable indicators of the subject's market value, including the comparable sales and listings included in this appraisal, the subject's contract price of $zzz,zzz is not supported by the available market data.

 

[Deadbusiness]

"Appraised value differs from the contract value. Please see explanation starting on page 1 and ending on the last page for explanation"