- Nov 17, 2003
- Professional Status
- Certified Residential Appraiser
Something I've been thinking about: When we state the appraised value as of a certain date, using the definition of market value which assumes exposure to the market, we assume that the "marketing time" precedes the date of the appraisal. In a stable or increasing market, this might not matter to a lender who is trying to determine whether there are assets to cover the loan. However, in a declining market, with a surplus of inventory, this number seems sort of bogus, because the value as of the date of appraisal could be significantly less in 30 or 60 or 120 days. So as of "today", in order for me to have a property sell, I would probably need to price it below the price of similar properties on the market. I realize that's not the "market value" as of a certain date. I guess what I'm wondering is, are appraisals in a declining market an exercise in futulity? What do they mean? And what are the best methods for reconciling values? (e.g., give most weight to pending sales, if available). Or is this something that is factored in by the lender in making the loan? (i.e, recognizing that given the declining market, today's value might not be tomorrow's value.) I'm thinking about this in the context of REO appraisals, and I also see that there are some other very salient discussions on this matter.