As Of Effective Date: Meaning

[J Grant]

The word sale is in the MV definition, but not "sale price" I asked where the word sale price is! Happy Monday lol

 

[J Grant]

Marion, the probable price within the definition of MV is always linked to the appraisal development (which is why any time an appraiser offers an opinion of value they have done an appraisal) You just made the classic move of taking a snippet from the definition as if that were the assignment and can be fulfilled on its own . See my post in thread # 14 , the two are always linked.

I don't want this thread to become about personalities, college degrees, name calling. A lot of insightful posts so far. We may not all disagree but keep it civil. Thank you.

 

[J Grant]

A) Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal.

THIS ABOVE is the market value opinion , and states how it was developed (as an example). The below is the definition of MV used. You can't extract the snippet of probable price from the definition and make that into the assignment. The MV definition defines the opinion, and is linked to the development of the opinion, it is not a substitute purpose of appraisal or substitute for the opinion. Which is why whenever an appraiser offers a value opinion that satisfies B, they have to develop an appraisal (A) to get there. (and be able to show the steps of development , in a report or at least in a work file.) Like it or not, A and B are linked for appraisers.

B) DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions (till end of definition)

 

[residentialguy]

JG,
What if you had 2 recent closed sales at $300k and 3 current listings at $285k? Assume the houses are identical. Would you still opine a value of $300k since that is the value supported by closed sales?

That would depend. If listings are priced below closed sales it must be a declining market.

Really??? Me thinks you assume too much. I see all the time where the final selling price is GREATER than the listing price. It is a selling method; Pricing low gets more buyers in the house and bid.

You must unlearn what you have learned - Yoda

 

[Howard Klahr]

Like it or not, A and B are linked for appraisers.

And nowhere in either statement does the term "sales" occur. Historical nor future in perspective ... but rather "as of the effective date".

The term value extends far beyond real estate. Your assertion that value contains "enduring elements" is not accurate but rather that commodities have characteristics that support value. However, value in and of itself is not enduring. Markets change, some faster than others. Many externalities change value too. All of these concepts comprise the resulting - value.

For example, when one purchases a car. The sale occurred moments ago. Yet the value has now changed. The value of stocks change constantly within the day yet value is reported. Many risks that affect real estate values as well. That is why for some risks investors obtain insurance. But the concept of the amount of the value being enduring is not a valid concept.

 

[J Grant]

Really??? Me thinks you assume too much. I see all the time where the final selling price is GREATER than the listing price. It is a selling method; Pricing low gets more buyers in the house and bid.

Which is why relying on listings/pending is less reliable than known prices of closed sales. Of course analyzing listings, pendings prices should be analyzed in context of the market.

Lower price listings as a ploy to encourage a bidding war in a strong market is a different strategy than a lower price listing in a weak market where listings sit with no offers.

 

[J Grant]

There is no enduring value in the car you purchases months ago? You are not still driving it and using it? Okay...

 

[J Grant]

DEFINITION OF MARKET VALUE: 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, 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 each acting in what he or she considers his or her own best interest; (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.

Howard, the term sale and sales occurs above. Even if an appraiser chooses not to use closed sales to develop value, if they are working with this MV definition, they are creating a presumed sale of the subject which closes as of effective date and since reasonable time allowed on open market is part of the definition, an exposure time must be developed ( exposure being retrospective to eff date)

 

[Ken B]

The nice thing about making it up as you go is that you can make anything mean anything.

Of course, it is a dishonest debate strategy, but, you know, as Charlie says "WINNING!"

 

[Howard Klahr]

There is no enduring value in the car you purchases months ago? You are not still driving it and using it? Okay...

And is that value different than what was reported on the effective date of value? ... Yes!

The issue is not does it have a value , your assertion is that the reported value should remain constant beyond the reporting of the value.

the term sale and sales occurs above.

Now you are being disingenuous. Your prior use of the term sales related to comparable transactions, not as the basis of the presumed sale of the subject property.