Question from potential private customer re reconciliation at sale price.

[J Grant]

Yo. I have been appraising over a decade and also sell homes. I have NEVER told a seller your home is worth zzz down to the dollar. I always give a range. Usually the range is 1% +\~ for tract homes and 5% for more rural.

That is fine for you to tell a seller the value is a range. ( telling them that as an RE agent, I assume ) But even a seller will need a finite number to list their property at ( the sale price might be the same as the list price, or higher, or lower ( The list price acts like a point value - a finite number to make decisions around.

Everygody inslucing appraises undernads value can be a range. Why do appraisers keep hammering on about it ? When the client asks for apoing value, that is what we provide. It is a lot harder to develop and credibly support a point value than a range. Give up our point value, and watch our profession disappear. It is already happening with WAIVERS.

 

[alebrewer]

Everybody including appraises understands value can be is a range

fixed it for ya.

 

[J Grant]

Surf Cat - in repsonse:

My reasoning is not misplaced. Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale.

Let's forget the appraisal terminology quiz and get back to the matter at hand.

Market vlsue is DEFINED as the most probable price.

But we are not providing a definition of market value as a $ amount.

WE are providing an opinion of market value as the $ amount.. They are NOT the same thing !!! This is where appraisers mislead themselves, and it creates conceptual problems.

Market value is a concept. (with an appraisal to support it ) A price paid is a fact. Our opinion of value remains a concept supported by the appraisal . USPAP says an appraisal is an opinion. On the URAR, it asks for our opinion of market value, as defined.

As defined, it refers to the market value definition, which frames the terms for the hypothetical model sale of the appraisal, and it is only in the MV definition where the term most probable price appears.

 

[J Grant]

fixed it for ya.

Wrong since USPAP says market value can be a point value. You've signed your name to point values, right? Were you lying every time you signed your name to a point value since now you say it does not exist? (or are you just wasting time )?

A point value exists in the appraisal and that is enough.

 

[Tom D]

I was taught in appraisal school to not look at the contract price until the opinion of value was developed.

If the contract price was not provided:
1. We would become better appraisers. No more appraising to the contract price and making adjustments to fit the needed value.

I am an adult. I can look at the sale price, but still make my own decision as to value. However, the sale price is a starting point in the process of determining that it is a reasonable sale price value.
Since no appraisal has the exact same adjusted comp values, but typical some kind of a range. How can you be so sure that your no look at sp value is better than the actual sale price in that same range. So would you then re adjust to the sale price if both were in the same price range. We all know what would happen, if you didn't want to be stiped to death.

That is fine for you to tell a seller the value is a range.

I tell them the range, give them a point value. Then say, could it sell for more, yes. Could it sell for less, yes. No confusion that my opinion is not set in concrete.

 

[alebrewer]

Wrong since USPAP says market value can be a point value. You've signed your name to point values, right? Were you lying every time you signed your name to a point value since now you say it does not exist? (or are you just wasting time )?

A point value exists in the appraisal and that is enough.

The fact that value exists as a range does not preclude one from picking a number within that range - ANY number - and expressing that number as the opinion. The good appraisers will have a disclaimer that value doesn't exist as a point, but that they agreed to express it as such as that was what their client expected. But that, any other point within the reconciled range could have been expressed as 'the value' with just as much support and credibility.

 

[J Grant]

The fact that value exists as a range does not preclude one from picking a number within that range - ANY number - and expressing that number as the opinion. The good appraisers will have a disclaimer that value doesn't exist as a point, but that they agreed to express it as such as that was what their client expected. But that, any other point within the reconciled range could have been expressed as 'the value' with just as much support and credibility.

Word salad gobbly gook,

A competent appraiser does not pick ANY number from the range like a drunk at a party. A competent appraiser has a REASON, or better yet, several strong REASONS they picked X $ number out of the range, and they explain it in the reconciliation.

That disclaimer, if you really provide it, should be a warning flag to a client that you are not to be trusted. I do not know of any appraiser who makes that disclaimer. Do you really say that in your appraisals? Where do you state it? In bold, or buried in mouse type?

If you do provide that disclaimer, chances are the client glazes over it and does not understand the implications.

 

[J Grant]

The fact that value exists as a range does not preclude one from picking a number within that range - ANY number - and expressing that number as the opinion. The good appraisers will have a disclaimer that value doesn't exist as a point, but that they agreed to express it as such as that was what their client expected. But that, any other point within the reconciled range could have been expressed as 'the value' with just as much support and credibility.

Making such a disclaimer proves taht the appraisal is not good, sorry to say.

Because they just signed their aneme to a point value, then go on to say value does not exist as a point.

I can not recall ever seeing this disclaimer in an appraisal.

 

[alebrewer]

Word salad gobbly gook,

A competent appraiser does not pick ANY number from the range like a drunk at a party. A competent appraiser has a REASON, or better yet, several strong REASONS they picked X $ number out of the range, and they explain it in the reconciliation.

That disclaimer, if you really provide it, should be a warning flag to a client that you are not to be trusted. I do not know of any appraiser who makes that disclaimer. Do you really say that in your appraisals? Where do you state it? In bold, or buried in mouse type?

If you do provide that disclaimer, chances are the client glazes over it and does not understand the implications.

You are so far removed from reality its mind boggling. Just because you don't understand a post doesn't make it word salad - it may mean that the writing is above your reading comprehension level. Were I a betting man, I'd pick the latter.

You're incorrect again, btw. A competent appraiser will understand that any point within a well developed and supported range is just as credible and supportable as any other point. Which is why, IMO, folks reconcile to the contract price so frequently.

Finally - I do not trust any appraiser who doesn't understand the above. Its a very elementary concept, and for folks not to grasp it is REALLY scary.

 

[shrubberyvaluation]

In my experience, if a property is selling above market value, its pretty apparent as soon as the comp search is underway. There is not an appraiser on this earth who can confidently appraise a property to within $5000 or so. I have appraised below sale price lots of times. The phone calls and emails from client, borrower and most of all RE agents are always fun after that lol.

I believe you can when comps are selling under $20,000. Especially with similar land sales.