Is the term 'price point' value a dangerous term.

[alebrewer]

I think there's a misconception about the term 'good enough'. I don't think anyone would argue that an appraiser's analysis is not precise enough to reconcile a point value. I don't, however, think the reason is that we're not good enough (well, some of us anyways). Its the data that's not good enough.

 

[J Grant]

I think your keyboard's broken....

His keyboard may have malfunctioned, but his final line asked a relevant question.

 

[J Grant]

1) the type of assignment in each request described in the Background section of this Advisory Opinion is an appraisal. If an appraiser is asked whether a specific property has a value (a point, a range, or a relationship to some benchmark), that Prequest is for an opinion of value (an appraisal). Appraisers, obligated to comply with USPAP, must develop a real property appraisal in accordance with STANDARD 1. Reporting that value opinion must be accomplished in accordance with STANDARD 2.

Here's the concept of "a point" in reviews...

Illustrations of the Language in an Appraisal Review Report WITH an Opinion of Value The following are examples of language that signify a value opinion (i.e., either by concurrence or by indication of a numeric point, a range, or a relationship to a numeric benchmark). These examples DO constitute evidence of a value opinion (i.e., appraisal) by the reviewer, thereby making the appraisal review one that includes an appraisal.

• “I concur (or do not concur) with the value.”
• “I agree (or disagree) with the value.”
• “In my opinion, the value is (the same).”
• “In my opinion, the value is incorrect and should be $zzz.”
• “In my opinion, the value is too high (or too low).”

I have done hundreds of field reviews. A field review is a bit of a different animal in that the appraiser is asked if they agree with the value in the OA, and that is a benchmark value question.

If the appraiser disagrees, the appraiser is then typically asked to grid sales and present their own independent point value for the prpert and explain why it was better supported than the OA value.

 

[Surf Cat]

9 of 10 appraisers might go back and "adjust" their adjustments so that it gets bracketed - especially if the original comp price is above the "target". Face it. If the margin of error is 1% - like in the example above - are we that good? (just to trigger UNoWho) No we are not. The data dictates the margin of error not the appraiser. We should not be "killing deals" over minor differences in price vs a calculated MV estimate.

Stated like a true professional who knows "the business" of appraising...

Other factors to take into account would be days on market, are there backup offers, history of median sales price as a percentage of list price...

If you're going to miss, you'd better miss.

 

[glenn walker]

Where is George he needs in this conversation....lol

 

[J Grant]

9 of 10 appraisers might go back and "adjust" their adjustments so that it gets bracketed - especially if the original comp price is above the "target". Face it. If the margin of error is 1% - like in the example above - are we that good? (just to trigger UNoWho) No we are not. The data dictates the margin of error not the appraiser. We should not be "killing deals" over minor differences in price vs a calculated MV estimate.

To clarify, it is the dishonesty of the appraiser that is part of the problem. You gave your reasoning above- is that the reasoning you also give a client on the appraisal? ff not, then you are being msileding The reasoning I explain a reconliin on the appraisal is the same as my internal reasons, whether my point value is the same as a SC price, or lower than it, or higher than it.

If an appraiser thinks this way, as you explain and as some others do to keep parties happy, then they should state it -

A true and not misleading statement: "The appraiser tweaked the adjustments which indicated 674k for the highest adjusted comp , in order to match the SC price of 680k. After all, nobody is that good ! And it is 1% within a margin of error. And we should not be killing deals over a calculated MV estimate."

Does anybody who uses this line of rationalizing have the guts to be honest and post the reasoning on the appraisal? I highly doubt it. t

PS - market value is not an estimate. !! Appraisers provide a market value opinion.

 

[J Grant]

Stated like a true professional who knows "the business" of appraising...

Other factors to take into account would be days on market, are there backup offers, history of median sales price as a percentage of list price...

If you're going to miss, you'd better miss.

Where is this in USPAP? If you're going to miss, you'd better miss.

It sounds like the teaching of a sleazy mentor. Unfortunately, mentors in appraisal are not screened for integrity, and some pass their bad habits on.

 

[Charles West]

As far as I know, price point is a term used by manufacturers to refer to sales volume and profit margins. It has no place in appraisal terminology.

 

[J Grant]

As far as I know, price point is a term used by manufacturers to refer to sales volume and profit margins. It has no place in appraisal terminology.

Tell that to USPAP lol

 

[Terrel L. Shields]

is the dishonesty of the appraiser that is part of the problem. You gave your reasoning above- is that the reasoning you also give a client on the appraisal?

If you killed a deal over a value that lies well within the margin of error, then you committed a criminal act in my book because you really are not that good. The problem is being too stupid to understand when your "accuracy" is impossible to be truly precise enough to be true. And I see appraisers make such stupid assessments with some regularity.

This does not mean your judgment does not count and there may be circumstances that make you stick to the original value. But adjustments are rarely dead to nuts. This is not a machining issue. Is the outbuilding worth $8,000? or $12,000? Is the pool really worth $20,000? or $60,000? And if the pair sales vary by 50% or more, then you really could run a Monte Carlo Simulation and explore the "most probable" number mathematically and come up with a far different number. But then again you have no idea with a MCS is.