As Of Effective Date: Meaning

[J Grant]

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby

Focusing on two aspects: most probable price a property should bring. Should means per the per the appraisal development itself, linked to the MV definition. The verbiage is not a speculative most probable price a property would bring (on) effective date. (would if Y happens)

The verbiage as of is used instead of "on"; because of the below;

Implicit in the definition is consummation of sale and passing of title AS OF X effective date. Since sale prices of contracts are typically negotiated before a property closes and passes title, doesn't this verbiage imply the price of subject was set prior to effective date? It even states "implicit in this definition" . A time adjustment can bring retrospective activity such as the sold comp prices current to today's effective date, but a time adjustment can't take us beyond the effective date to a future value (unless deriving a future value is the purpose of assignment)

I post this because agents ( and some appraisers) feel that appraisal results of market value opinions are "behind" the market. (behind future direction of the market) If that is so it is by design per the MV definition itself. I presume this is intentional since a value opinion is by design somewhat different than a pure price opinion. A price opinion can be more speculative in the future, or based only on today, vs a value opinion which is reliant on past events to support it.

 

[Meandering]

Where in the definition do you see that market value can not be at a future date?

You are chasing your tail.

Slow down and read ALL the words.

 

[J Grant]

?? Where do you see a future value in the market definition I refer to? I'll post the entire definition. To clarify, this thread is about market value opinions made on a present or past effective date, which is what most assignments consist of. Below is the definition for purpose of thread:

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

 

[Mr Rex]

Read the definition of exposure time.

 

[J Grant]

EXPOSURE TIME: estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. -

Which references the retrospective period of development. They ask us for our opinion of exposure time on a MV purpose appraisal.

Anybody who wants to explore future value purpose assignments, please start a different thread on that topic, thanks .

 

[Howard Klahr]

appraisal value is "slightly behind" the market.

A) it is not appraisal value it is market value. You quoted the definition and are now introducing a new term to describe what you just defined. This is why everyone gets confused.

B) market value is not behind by design, it is that adjustments for maket condition are not appropriately analyzed, especially in changing markets.

 

[Mike Kennedy]

1. The difference between market price and market...
   
   
   http://www.inman.com/2015/03/26/the-difference-between-market-price-and-market-value-in-real-estate/
   Mar 26, 2015 ... The difference between market price and market value in real estate ... the market price, which will then influence the market value of future sales. ... Market value is an opinion of what a property would sell for in a competitive ..... with the news that matters in residential real estate and thinks you should too.

1. When Talking About "Value", Choose Your Words...
   
   
   www.talcb.texas.gov/public/news-articles/when-talking-about-value-choose-your-words-carefully
   Real estate brokers and sales agents do not offer “opinions of value” – that area ... able to clearly explain the difference between “sale price” and “market value”.
   

 

[J Grant]

Howard, I was using the terminology RE agents use when complaining that our results are "behind the market", I will change it though to avoid confusion.

 

[J Grant]

I will change "behind the market" to Behind the future direction of the market, since RE agents believe an opinion of market value is supposed to match a sale price which is ahead of what any other closed sale of a similar property sold for, including one that closed last week.

 

[Meandering]

And the technical difference between "as of" and "on" is??

You are still chasing your tail.

Market value can be today, tomorrow or yesterday.

The only thing that changed is your "perspective" on the appraisal problem.

As of June 1, 2016 the stocks of banks will be less, because Puerto Rico is making it's first default today. Banks will lose money. As of August 27, 2008 bank stocks were low due to the economic collapse of subprime mortgages. As of today, bank stocks will trend lower with the Puerto Rico announcement.

Market value can be developed in any time frame.

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