Appraisal Bias

[The Bob]

We do offer a de facto range of value. It's the range of the comps, adjusted and unadjusted.
Why do you think they want at least 3 comps?
Ever heard of an appraiser being stipped for opining a value outside of the adjusted and/or unadjusted prices of the comps?
So they may not say so specifically, but it's pretty clear the users understand that what we do encompasses a range of value.

 

[J Grant]

I think J is probably allowing herself to be used as an example of folks who haven't quite come to grips with the difference between 'market value' and an 'opinion of market value'. Market value is an abstract concept that examines a property's worth as valued by 'the market'. Of course, 'the market' is - in and of itself - an abstract concept as well. We use the term 'most probable price' (along with a number of modifiers) as that is easy enough to understand, but vague enough not to pin the concept down. And even if a property DOES settle - between parties who fit the definition of market value - is that sale price the 'true' value of the property? Remember the old adage, "One sale does not a market make."?

Then we ask trained professionals to give their 'opinion' of what the market value MIGHT be. Of course we have quantitative and qualitative tools at our disposal to assist us in that pursuit, bat at the end of the day - our OMV (or EMV) is nothing more, or less, than a well supported (hopefully) OPINION. Were 10 appraisers to render valuation services on the same property, with the same effective date, we would most likely see 10 different results - ALL of which COULD be well supported. It should be easy to grasp, then, that the concept of a 'point value' as it relates to real property, is NOT reflective of the property's true value, but is simply an opinion, constrained by the needs of the users to be distilled into one point. On a theoretical basis, however, even that one point is - in reality - a range. If I call a property $500,000, I've effectively said the property is worth between $499,999.51 and $500,000.49. If we can agree that is the case, then we are in agreement properties will ALWAYS exhibit a range of value - and the more reliable and prolific the data - the tighter the range.

again, what the heck is "true value"??

We are not tasked with providing a "true value" (whatever that is )

A market value opinion is a hypothetical sale of what the as of eff date of what the value should be, should- as if it were transacted at teh terms of the MV definition and the SOW of the appraisal

The fact that any one of a number of possible prices might exist is there , so what? We are not guessing a price, we are opining a market value. It is our opinion specific to that appraisal and nobody outside the client/users need ever see it, know of it, or recognize it

 

[J Grant]

As Grant told me I should not even have a license LOL

dog license lol

 

[J Grant]

She would comply as long as it was printed on the form

it is not about printed on the form, it is about doing what we said we did ( and what is stated as the purpose, MV def etc on the report, whether it is printed, or typed in or hand written in.

 

[glenn walker]

dog license lol

No dog license I have not been fully vaccinated

 

[George Hatch]

I already did a range with the adjusted comps, I can highlight or paste it or whatever
I would be happy to do a range of value assignment, where are they lol?

You keep ducking this inevitability, which will occur at least some of the time:

What happens when your range includes an outlier that you don't think is that indicative of value? Thereby leading to your opinion of a value range - that's deliberately reconciled on its own apart from the math in the grid - that's narrower than the adjusted comps? What happens when your more recent comps are showing differently than the more dated comps?

Your SC grid doesn't always comprise your opinion of MV as a range, and saying otherwise will sometimes get into misleading. So no, "you're not already doing that". Your SC grid CAN sometimes lead to that opinion as a range but it won't always work out that way.

This will especially be the case when you're including sales that are among the most similar but for whatever reason don't fit the trend demonstrated by the majority of your most comparable direct and indirects sales. Remember, we're supposed to pick our comps by similarity, not by price and by extension not by fitting the prevailing trend. So there will sometimes be outliers n these SC grids.

That is, unless the appraiser is picking their comps by price and trying to avoid explaining why they didn't present or mention that outlier.

 

[J Grant]

No dog license I have not been fully vaccinated

Or neutered lol

 

[J Grant]

You keep ducking this inevitability, which will occur at least some of the time:

What happens when your range includes an outlier that you don't think is that indicative of value? Thereby leading to your opinion of a value range - that's deliberately reconciled on its own apart from the math in the grid - that's narrower than the adjusted comps? What happens when your more recent comps are showing differently than the more dated comps?

Your SC grid doesn't always comprise your opinion of MV as a range, and saying otherwise will sometimes get into misleading. So no, "you're not already doing that". Your SC grid CAN sometimes lead to that opinion as a range but it won't always work out that way.

This will especially be the case when you're including sales that are among the most similar but for whatever reason don't fit the trend demonstrated by the majority of your most comparable direct and indirects sales. Remember, we're supposed to pick our comps by similarity, not by price and by extension not by fitting the prevailing trend. So there will be outliers n these SC grids.

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.

An outlider sale usually is an outlier and not prevalent/typical so I tend not to rely on or give much credence to it ( typically). But every assignment is different and every appraiser has to come to their own conclusions about what data is most relevant and which is not relevant or of low relevance.

 

[glenn walker]

Or neutered lol

No she had that done to me after the birth of the one and only child. She wanted no more of my DNA to be spread

 

[George Hatch]

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.

An outlider sale usually is an outlier and not prevalent/typical so I tend not to rely on or give much credence to it ( typically). But every assignment is different and every appraiser has to come to their own conclusions about what data is most relevant and which is not relevant or of low relevance.

That's not what I said. What I said was the appraiser's opinion of value as a range will sometimes be a distinctly reconciled subset of the adjusted indicators in the SC, same as the point value is distinctly reconciled from the SC. They thought about it and deliberately reconciled to a conclusion, whether that conclusion is the range or a point. If an appraiser is so inclined, its easy to first reconcile to the range, and then the point within that range.

1. $275k-$305k (adjusted range in SC)
2. $290k-$305k (appraiser's opinion of value as a range)
3. $300k (appraiser's opinion of value as a point)

#1/#2 will sometimes be the same numbers, but they don't actually mean the same thing. #1 is a list, #2 is an individually reconciled opinion.
IRL appraisers almost always go from #1 to #3 without even considering #2. But, there's nothing preventing appraisers from going to #2 as an interim step before further refining to #3. Even when using a 1004 for a GSE deal.