USPAP Standard Rule 2-1

[Michigan CG]

"The DSCA shows a range of value from $100,000 to $160,000 with a value indication of $121,000.

Surely there is no appraiser stupid enough to submit a report with this wording. It is not possible to be this clueless.

 

[Terrel L. Shields]

the opinion of value that I use 99.9% of my appraisals is based on ONE value on ONE comparable sale. THe exact amount of that comparable sale

Then why bother with more than ONE COMP? Where in USPAP does it say you have to have THREE comps???

 

[App601]

If $121k is the weighted average and identifying it as such is accurate, it isn't misleading, is it?

I think you are asking about explaining the methodology of the reconciliation.

The weighted average would assign most "weight" to the comparables with the least amount of adjustments.
The implication is that the comps with the fewest adjustments are most similar to the subject and therefore should be considered ("weighted") on that basis.

I personally would not just say my value is based on the weighted average because sometimes the adjustments do not capture the full dynamic of the problem. And, I don't like to say "average" because that implies a rote calculation rather than me sitting and thinking about my final value opinion (how I considered it).
I'd explain how the weighting works and why I think, for a specific assignment, it would be appropriate.

But describing it accurately for what it is, isn't misleading IMO.

What I mean is that NOT describing how you arrived at the weighted average IS misleading

 

[App601]

If $121k is the weighted average and identifying it as such is accurate, it isn't misleading, is it?

I think you are asking about explaining the methodology of the reconciliation.

The weighted average would assign most "weight" to the comparables with the least amount of adjustments.
The implication is that the comps with the fewest adjustments are most similar to the subject and therefore should be considered ("weighted") on that basis.

I personally would not just say my value is based on the weighted average because sometimes the adjustments do not capture the full dynamic of the problem. And, I don't like to say "average" because that implies a rote calculation rather than me sitting and thinking about my final value opinion (how I considered it).
I'd explain how the weighting works and why I think, for a specific assignment, it would be appropriate.

But describing it accurately for what it is, isn't misleading IMO.

Not describing it is what I say is misleading

Sorry for the repaeat I loss the first comment

 

[App601]

Surely there is no appraiser stupid enough to submit a report with this wording. It is not possible to be this clueless.

Well I copied that comment from an appraisal by a "stupid appraiser"

 

[App601]

Then why bother with more than ONE COMP? Where in USPAP does it say you have to have THREE comps???

I do not know if you understood me but when I took my first appraisal course, the professor said that you should give more weight to the most similar comparable or in other words the one with fewest adjustments. Sometimes it is better and if all adjusted values are relatively similar to use either the most recent or nearest. Of course that you have THREE comps but let me give you an example

1st comp $110,000 net adj 3% gross 8% dist 1.2 miles
2nd comp $114,000 5% 12% dst 0.5 "
3rd comp $120,000 8% 15% dist 0.75 "

Opinion of value $110,000 based on ONE comparable fewer adjustments

If I believe that the property is worth $114,000 then ...$114000 nearest to subject based on ONE comparable

No average no weighted average based on ONE comparable

Capisci?

 

[Mr Rex]

Poor practice IMO.

 

[App601]

violation of USPAP standard rule 2-1 b

So I'm working on a report, in front of me. SCA has indications of $275, $328, $365, and $292.

I've given Sale No. 1 the most weight, along with Sale No. 4. Can you guess the value? I would think USPAP could give you the number.

$275 is my opinion sale no 4 is for support of value
I am assuming that comp #4 was sold over 12 months ago and is from the immediate nighborhood
and # 2 and 3 are not

if you can provide with more info I can give an opinion

 

[App601]

Poor practice IMO.

Mr Rex

Can you abound a little more? Do you refer to my previous post? or to appraisers that use the weighted average and range of values and a value within this range without explaining it?

 

[George Hatch]

If what you're driving at is that the statement doesn't include sufficient detail for the reader to understand it, that's an issue that is dependent on whether or not a summary of the appraiser's reconciliation is required for that assignment.

At its most bare bones application, SR2-2b.viii only requires the value conclusion be stated and explanations for the exclusion of approaches be provided. It doesn't require a summary of the reasoning that supports the analyses opinions and conclusions. Now whether a report that just included a statement of the appraiser's value conclusion and an explanation for why they excluded the Cost and Income approaches could be considered consistent with the intended use of that appraisal would depend on the intended use itself. so the answer to that question wouldn't be "never" and it also wouldn't be "always".

If the appraisal report was intended to meet the minimums of SR2-2a then not summarizing the methodology used probably could be considered a deficiency.


The use of the weighted average itself (or any methodology) amounts to a development issue, not a reporting issue.