Do We Predict Or Not?

[Terrel L. Shields]

From another thread

Someone requested we take this discussion off to another thread​

Yes, I will argue that we predict price and can do so well into the future...duh. We cannot see the future but certainly can make educated guesses about it... In fact, is is the very essence of the prospective appraisal.

How good is that guess? Perhaps events will make us look stupid. Certainly before the great recession we expected the sky to be the limit, and well after the downturn began, we still had folks arguing that the market was increasing or stable until it hit them square between the eyes.

Market Value is a guess about an event which is a completed fabrication...the sale of the subject here, now, today...it is always predicated upon the PAST (sales); the PRESENT (costs); or, the FUTURE (anticipated income). But it is not based on a sale of the subject closed as of the date of inspection normally.

As such we predict an event TODAY but as we project into the future, our crystal ball gets dimmer and dimmer...as anyone should expect.

 

[Meandering]

Yes, we predict, especially with commercial work, as that is the essence of DCFs, and in the shorter term, Pro-Formas.

And while I'm sure there will be a bunch of posts about SC being historic in nature, there are also multiple threads about the "value" of the "savings" of solar panels, which, are/were future projections.

But with the SC, because sales are generally "historic" older than it takes to close a loan, and the "market value" is of today, yes there is a projection from the date of the most recent comparable sale until the effective date of value. So while many will claim, no difference in market conditions in 30 days or less, that is because they caveat to sudden changes, as not having "data" for "support", such as the value the day after the hurricane, large fire, or 9/12.. But the refusal to make the "projection" due to a lack of immediate market reaction, does not mean the projection was not warranted.

Just my two cents.

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[Elliott]

I don't predict anything. Based on previous sales I opine the value today. The lender or other users take all the risks going forward.

 

[Carnivore]

Occasionally or maybe its better to say rarely we are ask to provide a Prospective Value on Residential. The assignment is likely to be a new construction. I have not completed any assignments for prospective MV. I imagine that a current MV using assignment acceptance date as the baseline provided along with the Prospective MV. Obviously you would have to use Extraordinary Assumptions and Hypothetical Condition together.

The question that comes to my mind is just how far can you reasonably go forward?

I have another reason for posting this situation and question. Elements of this and other situations are going to be the subject of another Topic/Thread..

 

[J Grant]

Very few assignments are future prospective values ( for lending at least where bulk of res assignments are . ) For MV purposes most new construction assignments made subject to completion are not prospective, they are as of the effective date, ( HC that subject was complete as of eff date ) but made subject to the actual completion to get funded.

 

[Meandering]

Better start adding those caveats that the Opinion of Value is valid only for the effective date, and no date in the future.


We can see a recession coming': Financial experts see an overheating economy amid rising rates in the housing market, while Warren Buffet's favorite metric even predicts a CRASH

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[Mike Kennedy]

It's also a very real possibility - the second quarter Bull$eyes loomed larger than life.

 

[TRESinc]

Better start adding those caveats that the Opinion of Value is valid only for the effective date, and no date in the future.

no need to. the form does not say the the value opined is good forever or anytime in the future, or anytime other than the effective date, already.

 

[Meandering]

no need to. the form does not say the the value opined is good forever or anytime in the future, or anytime other than the effective date, already.

View attachment 36386

You go with what you are comfortable wiith,

and the rest of us can do what we're comfortable with.

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[TRESinc]

You go with what you are comfortable wiith,

and the rest of us can do what we're comfortable with.

.

i'll go with what it states and not try to twist it to something i want it to be.