Are properties really selling over market value?

[J Grant]

These are examples of it but they aren't the only situations where undue stimulus could apply. Desperation on buyers' parts can result in undue stimulus.​

Citation needed.

Lol Mark is falling into your trap...because you are presenting scenarios of DV and LV, or situational scenarios

The MV definition is did undue stimulus affect price yes or no. It does not ask WHY it affects price ( the WHY is in our market analysis ) In that vein, it is possible for a court sale or divorce sale to produce a price not affected by undue stimulus.

 

[The Warrior Monk]

Compelled to sell is a liquidation market value or distress market value...the term "undue stimulus" is not present in LV or DV definitions for that reason....

Hence the reason we look to the courts for guidance.

 

[J Grant]

The term liquidation value is defined in The Dictionary of Real Estate Appraisal, Fifth Edition as follows: The most probable price that a specified interest in real estate property is likely to bring under all of the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and the seller are acting prudently and knowledgeably. 4. The seller is under extreme compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. The price represents the normal consideration for the property sold, unaffected by special or creative financing concessions granted by anyone associated with the

"Undue stimulus affecting price " is not present in definition of LV nor DV. (which uses compulsion instead )

That is the problem of trying to lift what a court of law determines as undue stimulus for their purpose of legal decisions vs using it for appraisal.

 

[J Grant]

Hence the reason we look to the courts for guidance.

Courts define words for their purpose. ( of rendering legal decisions )

Appraisals define words for their purpose (of appraisal )

Courts use of words can be a guidance but not when they conflict with the intended use of those words in appraisal.

 

[The Warrior Monk]

Courts define words for their purpose. ( of rendering legal decisions )

Appraisals define words for their purpose (of appraisal )

Courts use of words can be a guidance but not when they conflict with the intended use of those words in appraisal.

Let me ask a simple question: Why are deeds filed?

 

[George Hatch]

Also interesting is the part you cite where the examples are considered to be non-arms length. I've always said this but a contingent of AF members have been unable to grasp this concept for years. Some believe that non-AL has to be between related parties.​

That's not true. "arms length" means something, too. Just as one example of many, foreclosure sales never involve a previous relationship between buyer and seller, let alone one that would be of effect on the pricing.

 

[TerryRohrer]

Just asking your opinion here, not meant to be a challenge. The former. Multiple contracts on a single property - Isn't each contract per property considered an individual transaction. When multiple bids exist could it be considered undue stimulus or pressure to win the bid. Many, but not ALL properties are going to contract on multiple bids.

How could any number of non-acceptable offers be equated with a transaction? Doesn't a transaction imply ownership in something changed?

 

[J Grant]

Disposition Value: “The most probable price that a specific interest in a property should bring under the following conditions.”

1. Consummation of a sale within a specified period of time, which is shorter than the typical exposure time for such a property in that market.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both buyer and seller are acting prudently and knowledgeably.
4. The seller is under compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interest.
7. An adequate marketing effort will be made during the exposure time.
8. Payment will be made in cash in US dollars (or local currency) or in terms of financial arrangements comparable thereto.
9. 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.

disposition value does not have "undue stimulus " either

The "undue stimulus "is in the market value definition and not the other definitions, means undue stilulus is meant analysis of sales being considered in a market value purpose appraisal

Thus a court or legal definition of Undue stimulus (as a compulsion to sell ) is not correct for appraisal purposes ( correct apparently for legal purpose - but we are not signing report as an attorney we are signing it as an appraiser

 

[Alsie35]

I understand that's what happens. And it also makes appraisers accomplices in the process of inflating the bubble, i.e., using sales that were purchased by desperate buyers at a level that can't be defined by any reasonable person as MV.

Its a no win situation for appraisers, IMO. The lenders might as well simply accept the sales price on the purchase agreement as the MV, forego any appraisal, and require borrowers to put down 25%. Appraisals didn't prevent banks from losing Billions of $$ in the last crash and appraisals won't prevent the same thing in the next one.

Except that the buyers aren't "desperate" - more like calculating (as I was). As far as keeping track of the risks - that's the bank risk department's job. Ours is to give them the market value as of this moment. I have a feeling that some of us who went through 2003-2007 still have PTSD from the experience.

 

[J Grant]

Let me ask a simple question: Why are deeds filed?

record a sale, show proof of title/ownership