Are properties really selling over market value?

[J Grant]

That is because of the undue stimulus of those who continue to assert there is some grand difference between the definition of market value as given by Fannie and printed on the 1004 form, AND what the appraiser is supposed to be reporting.

As you stated and I fully agree, an entire market can not normally said to be under undue stimulus, not acting in its own self-interest, or stupid. If the market is composed of a bunch of uneducated greedy people, then guess what, that is the market. Deal with it.

Indeed - some market cycles are driven by greed and fear, which can become the dominant motivation.
Which still leaves us stuck with analyzing the price and the price per MV definition occurs under certain terms or motivations...which is what makes appraisals unique ( and hated at times )

An appraiser is like the sober person in a room full of drunks. The drunken crazy statements and smashing of glasses can be typical of all the inebriated folks. But the appraiser is tasked with an opinion of what the action of X be, if the person buying at X was sober

 

[George Hatch]

An appraiser is supposed by more like a mirror in a room full of drunks.

 

[The Warrior Monk]

Quite frankly, I don't understand how appraisers can simply dismiss legal application of terms and phrases in the most heavily regulated portion of appraising. And especially using it in a matter that is completely opposite; e.g., marketwide versus transactional.

 

[residentialguy]

The key word is "multiple."

Are we talking about a bidding war on one property, or a marketwide phenomena where this is happening with multiple properties due to supply and demand issues? In other words, is it a transactional or marketwide issue?

This is about market phenomena... principle of substitution shows the same for other similar properties.

 

[Mark K]

Everything you just cited is a choice. There isn't a job they have to take. They don't have to live in any one place. Those are all examples of people doing as they choose. That is not undue stimulus, that is free will.

To follow that line of thinking, nobody HAS to buy anything.

 

[J Grant]

An appraiser is supposed by more like a mirror in a room full of drunks.

IF that were true,

1)there would be no market value definition ( which is what the property should bring if transacted at SOBER terms )

2) if we are nothing other than a mirror, why do clients need an appraisal? |A RE broker price opinon or a Zillow print out is a mirror.

I am surprised at your recent posts... unless they are just for debate, there seems a shift toward a price opinion around deal agenda and away from developing an appraisal for a MV opinion.

 

[Evincere]

It is not our role as appraisers to be the gatekeepers for what is and isn't a rational market.

Our role is to provide transparency so as to enable our users to make an informed decision:

The 2 roles are not mutually exclusive.

 

[J Grant]

An appraiser is supposed by more like a mirror in a room full of drunks.

A drunk can not legally sign a contract and have it enforced. ! A sale contract is not legally binding if turns out signed under the influence or mental illness

In any event as you know I was using it as an example. An entire market can at times resemble a drunken run. WRT to the recen Game Stock rise and fall or rapid swings in stock or RE market.

 

[Mark K]

Dood, if we're talking about the SFR market then "rational" doesn't usually apply;

Of course it does. Maybe you spend too much time in the non-res market but the res market is usually rational. There are usually multiple houses to look at over a given period of time, DOM is generally 90 days, +/- (at least in this area). Buyers look at a house, like it, submit an offer (about 97% of asking price historically) and if the deal doesn't work out, they look at a few more over the next week or so and try again. This is a rational, normal res market.

When nearly any listing has 10-15+ offers in the first 24 hours with most of them 5-15% over list price, this isn't a rational market. Buying a house always has a certain emotional element involved but not so much as to make it irrational.

Avg. DOM here is currently 4 days, median is 1 day. Not normal or rational. Atypical.

 

[DWiley]

In a certain Florida market almost 40% of appraisal reports are currently expressing value opinions below the contracted purchase price. Thoughts on that??