Appraisal Bias

[George Hatch]

If you had a subject and all your comps reconciled to the same number, then on the conceptual basis and to answer the question you could theoretically say that range is from $305k to $305k and is similar to the point value of $305k. I'm no math genie, but on the face of it the number itself isn't the distinguishing factor between the concepts of a range and a point.

 

[CGinMN]

You could even take it one step further and tell the reader what the value assuredly is not, which is useful when you have a contract price that is not within the opinion of values as a range.

 

[George Hatch]

I do that on the regular with listings. If a listing expired or was withdrawn after a lengthy exposure then I refer to that as being indicative of what that property apparently WASN'T worth at the time of listing. I just had that last week with a subject that had been listed for 7 months at $3M but didn't sell. That failed listing apparently exceeds the upper limit of value for what buyers were buying.

 

[Terrel L. Shields]

most often associate those with a confidence interval

almost all have stats with the sales used.

when the appraiser objects to giving a point value

No one 'objects' to giving a point value. They simply are pointing out the precision of a point value is no more accurate than a range.

I am an idiot, a terrible person and an appraiser who is arrogant, judgmental and annoying!!

We luv you anyway....

Can anyone point me to a class they took, a USPAP standard, or an appraisal article that is the basis for developing and supporting a 'range of values'?

Definition section of USPAP pg 3 - "numerically expressed as a specific amount, as a range of numbers, or as a relationship" (not more than, great than, etc.

Why do you think they want at least 3 comps?

USPAP does not require 3 comps.

 

[Surf Cat]

No one 'objects' to giving a point value. They simply are pointing out the precision of a point value is no more accurate than a range.

Exactly

 

[Zoe]

I can say between $50,000 and $100,000.

 

[Surf Cat]

I can say between $50,000 and $100,000.

That's a comp check for mortgage brokers back in the day Lol

 

[J Grant]

Most people understand a property can get in the actual market a price different than a market value opinion. Mortgage lenders especially understand it , all they care about is does their deal work, is there enough in the value opinion for their LTV% to greenlight the loan.
With Waivers, mortgage lenders have graduated to becoming valuators. Think about that for a moment. The lender (X person from there, loan officer? ) gets to write their value estimate for the property, and their value estimate becomes the property value. ( as long as it falls in the range of the fannie/freddie AVM value range.) How this will distort markets and pricing idk but I suspect it already has. The lender value estimate is the sale price in a purchase. waivers were used in volume in the recent soaring price increases from 2021 to now. I watched prices balloon up and since the SC price is the value in a waiver there is no check or balance on it, except for the proprietary AVM value range.

I did get heated responding to the people who said it should be a value range, not a point value because that very thing has happened and decimated the profession. Do you folks honestly think a client is going to pay for a value range only, without a point value? A value range is such a low bar product that any AVM or analyst can run off a value range, and it is very easy for an appraiser as well. And takes away all the angst and responsibility for "killing a deal" or "coming in low". The only problem with providing only a range is that almost no client will pay for it , because in nearly all cases, a point value is needed, and if somebody other than the appraiser provides the point value, that person or system earned the fee or the privilege.

 

[J Grant]

Depending on product need , the small amount of private work I do I will often make a comment that the market might bring price offers lower or higher than the appraisal point value opining, which is a value model used for decision making purposes by the client and intended users.

That way they understand if they list the property for sale and my OMV was 300k, an offer close to that might be a good offer to consider.

 

[alebrewer]

True, the point value need not come from the range of adjusted comp prices, though in lender work they question it when it is not the case.

Ummm - can you provide an example of when this might happen? (assuming you're reporting on the 1004, which requires you to place all your weight on the SCA)....