MV opinion vs a price estimate

[glenn walker]

The client wants the most probable sales price but we don't change what we do ?

 

[J Grant]

The client wants the most probable sales price but we don't change what we do ?

How can we change what we do when professionally we are bound by USPAP to give a market value opinion? ( which often turns out to be the most probable sale price, provided they sell at MV terms )

If your appraisal states the purpose of the appraisal says opinion of market value, we have to give an opinion of market value.
If you want to change it to purpose of appraisal provide a most probable sales price, then do it, - but as far as I know it will not be USPAP compliant

There is a way to do both, do what we say we do professionally and be USPAP compliant, and advise a client around their particular want ( a most probable sale price ) explain to them what the opinion of market value is based on and that in the market , a number of any offers to purchase at different prices can come in, and since they have an opinion of market value, they can use that to decide what offers to accept, and that any offer at or above the opinion of market value might be a reasonably good offer (or whatever you want to advise them )

 

[glenn walker]

I r

How can we change what we do when professionally we are bound by USPAP to give a market value opinion? ( which often turns out to be the most probable sale price, provided they sell at MV terms )

If your appraisal states the purpose of the appraisal says opinion of market value, we have to give an opinion of market value.
If you want to change it to purpose of appraisal provide a most probable sales price, then do it, - but as far as I know it will not be USPAP compliant

There is a way to do both, do what we say we do professionally and be USPAP compliant, and advise a client around their particular want ( a most probable sale price ) explain to them what the opinion of market value is based on and that in the market , a number of any offers to purchase at different prices can come in, and since they have an opinion of market value, they can use that to decide what offers to accept, and that any offer at or above the opinion of market value might be a reasonably good offer (or whatever you want to advise them )

I really don't think its an issue for 99% of all appraisers know what the lender wants and as long as the report comes in at above the sales price everyone is happy. In 35 plus years maybe at best ever had anyone including buyers ever say thanks for coming in low and now with Fannie-Freddie buying million dollar mortgages it really doesn't matter because when those bad boys crash that 45 Page-Paper weight we call an appraisal wont be worth the paper its written on. Have to give NAR credit as they have really sold the public on why value is determined by the buyer and sellers and frankly teh ledners also drank the look-aide and so off we go to another potential mortgage crisis in 2022.

 

[J Grant]

I r

I really don't think its an issue for 99% of all appraisers know what the lender wants and as long as the report comes in at above the sales price everyone is happy. In 35 plus years maybe at best ever had anyone including buyers ever say thanks for coming in low and now with Fannie-Freddie buying million dollar mortgages it really doesn't matter because when those bad boys crash that 45 Page-Paper weight we call an appraisal wont be worth the paper its written on. Have to give NAR credit as they have really sold the public on why value is determined by the buyer and sellers and frankly teh ledners also drank the look-aide and so off we go to another potential mortgage crisis in 2022.

I don't do an appraisal to get thanks or have the buyer or RE agent like me or to make people happy. Not everyone is cut out to be an appraiser and being a people pleaser might not be the best fit ! or some appraisal areas of practice better for it than others.

Clearly I am aware that in a sale purchase appraisal everyone (typically) wants the appraisal to meet or exceed the SC price. If it is a tie and the property is nice and or market conditions stable to rising the SC price wins. If the property is inferior or market starting to decline the OMV wins.

We don't tell a buyer what to pay in a lending appraisal, we tell client opinion of market value (and other information.) A buyer is free to put more $ down over appraisal value opinion below a sc price.

 

[RCA]

"What price can I sell my house for" has one meaning. An appraisal provides a value with a reasonable exposure time. This directly correlates to the sale price and marketing time. Sure, it's hypothetical based on the effective date and the constraints of the market value definition. What actually transpires could be different for a multitude of reasons. But shouldn't we strive to produce values that correlate to the most probable sale price based on the realities of the actual market?

If I did ten private appraisals to determine reasonable sale prices, and seven of those ten homes ended up selling for more than a 20% variance to my MV, this would concern me. I wouldn't just waive my hand and yell "price doesn't equal value!"

I realize that we do not predict the future, and in these crazy times an appraisal is only good for one day. This is not how it's been for the majority of my career.

It seems to me you are contradicting yourself a bit. You appraise to the market conditions as of the effective date of appraisal. If the house sells somewhere down the road in a year or two, market conditions could be quite different, so of course the values will not match. So, you should adjust for market conditions, and that can only be approximate. In fact between December 2020 and February 2021, market conditions changed in this area quite rapidly.

Most appraisals are for loans, and I keep saying that there should be a "Mortgage Lending Value" for appraisers to work with that does allow predictions into the future. 80% LTV is kind of meant to provide that. But if we are really looking for a reasonably minimum foreclosure value to cover the period when a home is most likely to go into foreclosure or be sold via short sale, then the appraiser should be aiming not at some Market Value - but rather some kind of Mortgage Lending Value that targets Foreclosure Value for the subsequent 8+/- year period. (After 8 years of payments increasing equity/decreasing balance starts to cover risk). The Germans have MLV, but they are about the only country that does, as far as I know.

The true importance of Market Value is that it is what provides you a ranking of the subject property against the recent sales in the subject area. It is the ranking and the associated residual that gives you an objective measure of the so-called intangible or unmeasurable features of a property. And this solves some very serious problems with the current SCA.

 

[residentialguy]

The difference between a BPO and an appraisal? Only we can call it an appraisal.

 

[jay trotta]

At the bottom of Page 2 I see, Sales comparison approach_______________ Replacement Cost Appraoch__________________ Income Approach________________

Do not see anywhere in the report, or under C& L Conditions we are signaturing a Price ?

 

[J Grant]

At the bottom of Page 2 I see, Sales comparison approach_______________ Replacement Cost Appraoch__________________ Income Approach________________

Do not see anywhere in the report, or under C& L Conditions we are signaturing a Price Value ?

What is a price value?

Bottom of page 2 , below the three indicators you noted, my/our opinion of market value ( as defined ) is X$ ,
( as defined - see the market value definition in the C & L )

 

[J Grant]

The difference between a BPO and an appraisal? Only we can call it an appraisal.

Lol Hi Residential Guy and Happy Thanksgiving !

BPO is a Broker Price Opinion Appraisal is an Opinion of Market Value

THAT is why we can call it an appraisal! (because it is an opinion of market value and not a price opinion)

 

[Mike Kennedy]

OMG my head is exploding ! will have to think on that one !

Every square is a rectangle but not every rectangle is a square

Definition: A square is a quadrilateral with all four angles right angles and all four sides of the same length. ... Thus every square is a rectangle because it is a quadrilateral with all four angles right angles. However not every rectangle is a square, to be a square its sides must have the same length.