Contract Price Change After Effective Date - Client Wants It In The Contract Section

[CANative]

The back of my eyes and part of my forehead hurt from eye rolling.

 

[Mike Kennedy]

484 Standards Rule 1-1
485 In developing a real property appraisal, an appraiser must:
486 (a) be aware of, understand, and correctly employ those recognized methods and techniques that are
487 necessary to produce a credible appraisal;

580 Standards Rule 1-4
581 In developing a real property appraisal, an appraiser must collect, verify, and analyze all information
582 necessary for credible assignment results.
583 (a) When a sales comparison approach is necessary for credible assignment results, an appraiser
584 must analyze such comparable (not a subject prop) sales data as are available to indicate a value conclusion.
585 (b) When a cost approach is necessary for credible assignment results, an appraiser must:
586 (i) develop an opinion of site value by an appropriate appraisal method or technique; { comparable market data-not a subject prop}
587 (ii) analyze such comparable (not a subject prop) cost data as are available to estimate the cost new of the
588 improvements (if any); and
589 (iii) analyze such comparable (not a subject prop) data as are available to estimate the difference between the
590 cost new and the present worth of the improvements (accrued depreciation).
591 (c) When an income approach is necessary for credible assignment results, an appraiser must:
592 (i) analyze such comparable (not a subject prop) rental data as are available and/or the potential earnings
593 capacity of the property to estimate the gross income potential of the property;
594 (ii) analyze such comparable (not a subject prop) operating expense data as are available to estimate the
595 operating expenses of the property;
596 (iii) analyze such comparable (not a subject prop) data as are available to estimate rates of capitalization and/or
597 rates of discount; and
598 (iv) base projections of future rent and/or income potential and expenses on reasonably clear and appropriate evidence.24
600 Comment: In developing income and expense statements and cash flow projections, 601 an appraiser must weigh historical information and trends, current supply and 602 demand factors affecting such trends, and anticipated events such as competition 603 from developments under construction. { competitive market - NOT a subject prop }

634 Standards Rule 1-6
635 In developing a real property appraisal, an appraiser must:
636 (a) reconcile the quality and quantity of data available and analyzed within the approaches used;
637 and
638 (b) reconcile the applicability and relevance of the approaches, methods and techniques used to 639 arrive at the value conclusion(s). {See SR 1-4 above}

655 Standards Rule 2-2
728 (viii) summarize the information analyzed, the appraisal methods and techniques employed,
729 and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the
730 sales comparison approach, cost approach, or income approach must be explained;
727
731 Comment: An Appraisal Report must include sufficient information to indicate that
732 the appraiser complied with the requirements of STANDARD 1. The amount of
733 detail required will vary with the significance of the information to the appraisal.
734 The appraiser must provide sufficient information to enable the client and intended
735 users to understand the rationale for the opinions and conclusions, including
736 reconciliation of the data and approaches, in accordance with Standards Rule 1-6.
737 When reporting an opinion of market value, a summary of the results of analyzing
738 the subject sales, agreements of sale, options, and listings in accordance with
Standards Rule 1-5 is required.
739 If such information is unobtainable, a statement on
740 the efforts undertaken by the appraiser to obtain the information is required. If such
741 information is irrelevant, a statement acknowledging the existence of the information
742 and citing its lack of relevance is required.

_____________________________________________________________________________
737, 738 - analysis of agreements of sale, options, and listings is just that - analysis.

That analysis is NOT a factorable element in the recognized Approaches to Value.

Therefore, a current sale agreement, an option, or a listing is irrelevant to developing and reporting a MARKET-based Opinion of MARKET Value as indicated by the Competitive MARKET (reflected by actions of other buyers & sellers on OTHER properties - NOT a subject property).

Your turn.

 

[CANative]

Why are you talking about approaches to value? That's not what this is about.