Question from potential private customer re reconciliation at sale price.

[alebrewer]

That is an unproven statement unable to make a correlation between quality and fees, and it always comes from AMC-affiliated appraisers- what a coincidence!

What AMC affiliated appraisers are you referring to?

 

[Mark K]

I don't think it's offensive. I think it is the exact outcome that should be expected.

The graph shows that if you give an appraiser a target, they're more than likely going to hit it.

The graph fits in well with the one that shows that 80% of drivers think they are better than average, 65% of the population think they have an above average IQ, and 94% of college professors believe they're smarter than their peers.

 

[Terrel L. Shields]

At any given point in time a property will always express a range of value. Price is a point - value is a range

good way of putting it. We could define the market value as a point price within a range = $565,00 with margin of error of 4% (which implies pretty good data), or $565,000 with margin of error of 11% (which implies not so good data)

 

[CGinMN]

The graph shows that if you give an appraiser a target, they're more than likely going to hit it.

To me, the graph shows that when you give the appraiser data, they will consider it.

 

[J Grant]

I disagree and I'm going to stand by my assertion. The real estate purchase is an emotional one, A hurried one, A desperate one. There's no way that anyone on this forum can "pinpoint" at any point in time the "exact value" of what a home price should be.

Does that mean appraisers shouldn't be used? Of course not. We follow (okay, some follow) well documented methodology that leads to the most probable price as of the effective date of value that falls within an adjusted range. Basically, an educated guess as to the price the real estate would fetch in a free market. Doctors do this too by the way. Medical science is not an exact science. They are using their best educated guess based on the patient's symptoms.

Ale's post in this thread illustrates my point.

Which value of the property is correct? Is it exactly $750k or is exactly 950k? I doubt either. But one of them is within the range of the most similar sales as of the effective date.

It seems you don't understand why we arrive at value differently than an emotion-driven buyer. Ale has the same problem that you do, -


Yes, a RE purahse can be emotion driven ( I sold RE for over 5 years ) But that is why we are hired - because the appraisers develop the value per the model of the rational, and well informed or well advised and typically motivated "buyers" ( and sellers) in th eMV Defition.

Some prices are well supported by the appraisal development, and some prices are not. We vet the prices of the data and the ocmps and adjust the comps for a MV equivalence. What do you think we are doing if not that?

 

[Terrel L. Shields]

The graph shows that if you give an appraiser a target, they're more than likely going to hit it.

Anchor bias is impossible to counter without the danger of over-compensating for it. Even when you know that an anchor bias exists.

 

[alebrewer]

good way of putting it. We could define the market value as a point price within a range = $565,00 with margin of error of 4% (which implies pretty good data), or $565,000 with margin of error of 11% (which implies not so god data)

Yep. I've never understood why the users of our services never pressed the idea of confidence intervals (other than that most appraisers don't know how to develop them). I think our industry would be on MUCH more stable ground now had we incorporated that type of analysis, but its a moot argument now.

 

[Surf Cat]

Its not worth the fight, bro. She'll die on that hill.

Lol.... I was writing my retort and missed this...

USPAP states that the market value opinion can be expressed either as a point or a range

Case dismissed.....I win

 

[J Grant]

good way of putting it. We could define the market value as a point price within a range = $565,00 with margin of error of 4% (which implies pretty good data), or $565,000 with margin of error of 11% (which implies not so god data)

The MV point value is already a price point within a range.

But knock yourself out and qualify it further for your clients-

 

[ucbruin]

"...value was reconciled at the exact sale price. She was curious as to why?"

I would have told her....
It is "curiouser and curiouser"....
And smiled....