I have read the various definitions of market value. No where in any of them does it mention anything about it depending on occupancy. What is your assignment? Market value? Liquidation value? Value in use? Is the propert more or less valuable to the typical market participant because the Seller's cousin is living there? Or because it's currently rented? Or because it's in foreclosure and the occupants haven't yet been evicted? No. You are appraising the property.... not the situation.
Agree. If appraisers appraised a subject according to occupancy, then we truly would be guilty of the lawsuits saying a property appraised higher because the owner occupant was white vs when the appraiser thought the owner occupant was black.
Mv ( certs ) assume clear and marketable title which assumes no adverse possession/occupant title issues. Appraising a property based on it having adverse possession/squatters would not be MV
The question is, why are some appraisers confused about this??? The answer is the most basic part of appraising which, it seems, some still don't seem to understand. Our appraisal of the subject is based on a
MODEL, HC "sale" of the subject which occurs at the terms and conditions in the definition of market value !! It is NOT an appraisal at the terms of conditions of a specific deal, contract, or based on who occupies it .
Thus, we do not appraise an REO owned house as an "REO property " ( there is no such property type, REO is a form of ownership). If we are appraising an REO owned house for market value, we appraise it for the most probable price it should bring as any other house if sold at the MV definition terms and conditions. That holds true for situations such as whether subject is occupied or vacant, rented or not, being used as an air bnb, etc etc. Many houses we appraise are not officially listed for sale, (such as a refinance) , yet we appraise them "as if" they they are in a sale transaction for the SCA. So the same applies in an actual sale, where we still appraise the subject "as if" it is in a sale transaction at the MV definition terms for the SCA. That is why we are supposed to ignore concessions and other specific sale contract terms, yet we have posts here asking if since the subject contract has a concession, the comps need to be adjusted. That shows the appraiser does not grasp that they are appraising a HC theoretical "sale", not the actual price or terms present in a contract. Imo this problem is so fundamental that an appraiser not grasping it needs to go back for re education or find something else to do. This lack of understanding is why we see appraisers running around trying to support a real world SC price instead of appraising the property - it can lead to the worst problems we can find in appraisals.
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