MV opinion vs a price estimate

[J Grant]

My head is spinning from another thread where people were saying a price estimate or price prediction and a market value opinion are one and the same . They are not. Just because a market value opinion is a theoretical price , does not mean we are prediction the price, or trying to estimate an actual price in the market.

What we are doing is opinion an opinion of market value at a most probable price EQUIVALENCE - ( most probable price at the terms and condiitions of the used MV definition )

Now,, a price estimate and a market value opinion may turn out to be the same $ amount. And I like to hope that a OMV and an actual price if within a short time are in a very close range of each other. Still, they are not one and the same thing.

It is impossible for an appraiser to guestimate, or estimate, or predict the $ figure Bob the buyer and Sally the seller out in the real market will negotiate. But I can opine what my appraisal of the $ figure a typically motivated buyer and seller will transact per the SOW of the appraisal as the probable price equivalence to the market value opinion )

 

[JeffSH]

This again from J Grant. I don't understand why you make this so complicated. An appraisal is a price opinion per the effective date. Market value is the "The most probable price..."

It is impossible for an appraiser to guestimate, or estimate, or predict the $ figure [PRICE] Bob the buyer and Sally the seller out in the real market will negotiate.

This is literally our job. Edit: See clarification below.

 

[JeffSH]

Market value assumes that Bob and Sally are "acting prudently, knowledgeably." Unless Sally hires a realtor or does a lot of personal research, how would she know what's reasonable? Same with the seller. I've appraised FSBO situations where the seller lost out on $100k because they didn't consult with someone who had experience in the market. I've said this explicitly in my report when I've come in far above the contract price.

and the catch-all 'undue stimulus' covers the rest.

It's not our job to explain why a certain price is not the most probable, though if it's obvious then we should point it out. Appraisers give price opinions based on their extensive knowledge of the market.

 

[J Grant]

This again from J Grant. I don't understand why you make this so complicated. An appraisal is a price opinion per the effective date. Market value is the "The most probable price..."



This is literally our job.

Sorry, not trying to be a pest but an appraisal is NOT a price opinion. An appraisal is a market value opinion. This is the very reason I started this thread!!

It is not our job is not literally to estimate the most probable out in the market price ( and call it a market value opinion.) Our job is to develop a market value opinion in our appraisal, at the most probable price $ amount ( per the MV definition used ).

The order is a market value opinion (developed in appraisal) at a most probable price $ amount . It is not a price opinion as a market value (that is backwards, ).

 

[TerryRohrer]

Well, those waters are getting muddied as the powers that be start judging appraisals based on the "appraisal gap." But I agree. Any given transaction price is based on the circumstances and motivations and interests of the two parties involved, influenced by those around them, some advising them well and some victimizing them to get a cut of the transaction. The sale price of the subject, and those attendant motivations, warrant no more weight than each of the other transactions within the same market area and price/product group.

I am responding to an AMC about to remove me from their list as I forgot to ignore the data and rubber stamp the contract price on a couple of their deals (oddly enough, I concluded an opinion of market value above the contract price on an equal number of cases, but they haven't raised objections to those yet). Among the criticisms is that "The opinion of value is $xx below contract price and $XX below list price. However, there is no commentary in the report to explain to the reader why they feel that the subject's contract price is not supported in the market." Aside from the apparent lack of command of the English language, your concern is over a stance that has become commonplace. Firstly, my feelings have nothing to do with an appraisal and are not analyzed or reported, ever. But other than stating that my analysis of market data doesn't support the contract price as representative of the subject's current market value, there is no need for my opinion on the matter.

 

[J Grant]

Market value assumes that Bob and Sally are "acting prudently, knowledgeably." Unless Sally hires a realtor or does a lot of personal research, how would she know what's reasonable? Same with the seller. I've appraised FSBO situations where the seller lost out on $100k because they didn't consult with someone who had experience in the market. I've said this explicitly in my report when I've come in far above the contract price.

and the catch-all 'undue stimulus' covers the rest.

It's not our job to explain why a certain price is not the most probable, though if it's obvious then we should point it out. Appraisers give price opinions based on their extensive knowledge of the market.

Indeed, Bob and Sally out in the real world can not be expected to always act accordingly to the MV definition, nor can we predict what $ amount price they will reach.

But we CAN model what the typically motivated appraisal buyer and seller will decide on $ price,. Some appraisers seem to mix the two up, as if we are trying to predict or model an actual real world price an actual buyer or seller will pay. Such a feat is impossible, if we could do that we'd all be sports betting pros. Zillow 's own billion $ algorithms failed at it too.

 

[J Grant]

Indeed, Bob and Sally out in the real world can not be expected to always act accordingly to the MV definition, nor can we predict what $ amount price they will reach.

But we CAN model what the typically motivated appraisal buyer and seller will decide on $ price,. Some appraisers seem to mix the two up, as if we are trying to predict or model an actual real world price an actual buyer or seller will pay. Such a feat is impossible, if we could do that we'd all be sports betting pros. Zillow 's own billion $ alogorithims failed at it too.

Sometimes our opinion of market value can match an actual real world price, and if it is a pruchase, we can refine a point value at a SC price as one more piece of relevant market data. That is fine whenour OMV is otherwise supported in the appraisal. But that is different than manipulating value to match a price, or inflating value to match a price, or worse, making an entire appraisal around "supporting a SC price".

An appraisal does not support a SC price. An appraisal supports its own market value opinion.

 

[J Grant]

Market value assumes that Bob and Sally are "acting prudently, knowledgeably." Unless Sally hires a realtor or does a lot of personal research, how would she know what's reasonable? Same with the seller. I've appraised FSBO situations where the seller lost out on $100k because they didn't consult with someone who had experience in the market. I've said this explicitly in my report when I've come in far above the contract price.

and the catch-all 'undue stimulus' covers the rest.

It's not our job to explain why a certain price is not the most probable, though if it's obvious then we should point it out. Appraisers give price opinions based on their extensive knowledge of the market.

While this is mostly true, it still is missing out a bit on the appraisal end.

(for a MV purpose assignment- ) Appraisers do not give price opinions !!!!! Including very expert price opinions based on our extensive knowledge of the market.!

Apprasals give market value opinions ( at a most probable price equivalence ).

I am not trying to be a stubborn mule about it but it is a critical distinction and one that trips appraisers up.

 

[JeffSH]

An appraisal does not support a SC price. An appraisal supports its own market value opinion.

See my clarification. It's not our job to determine the random price that two people will come up with, but if they are acting prudently, knowledgeably, and without undue stimulus, then our market value should match.

 

[JeffSH]

Apprasals give market value opinions ( at a most probable price equivalence ).

In other words, an appraisal is an opinion of price.