JG, identical homes sway more than that. what do you say when 4 identical recent comps sell with identical finance between $350-365k? (and other similar comps support that)
We both know how highly improbable the above is. When in the real world do we actually have 4 identical comps to a subject? The very few times this happens is with builder new homes and then there are concessions and other things going on with the sales.
What is the most probable mv??? It's any point between $350-365k. Every point value is equally probable. The problem with FNMA is that they want a point value when every house has more than one probable value that is just as supported.
That would be true if your example actually happens, but its so rare it doesn't apply. We don't work with 4 identical comps, we work with 4 comps where one might very closely resemble the subject in most aspects, another varies but offers a key aspect of subject such as view, and others need more adjustments because they are inferior or superior or sold at different times or had conditions affecting sale etc. Therefore most probable price is not a random number anywhere along a range of adjusted price comps, nor is it a statistical probability , such as an AVM assigns.
Buyers don't pay 350k rather than 360k as a random point in a range, nor do they pay 350k rather than 360k because of a statistic. Buyers pay 350k rather than 360k because of attributes or defects of that individual property, as well as conditions at time of sale. A seller accepts 350k rather than 360k because of exposure of DOM, competition from other properties and conditions at time of sale. They don't accept 350k because its just as probable as 360k, they accepted 350k because its the best they can get for how their property stacks up against the competition.
Granted there are s personal buyer/seller motivations around negotiation affecting price, but market value development in appraisals act as a proxy for how buyers and sellers behave, and they don't behave by seeing any price between 350k and 365k as equal.
Yes, you may have a personal opinion that it's $355k, but you're only kidding yourself to say that another point isn't as equally probable.
Of course out in the market, any number of prices can be probable for a property, (though perhaps not equally probable). But that's besides the point since we are not dart boarding that probability. An appraisal is a theoretical model of a presumed sale, developed to fulfill a set of conditions in the MV definition , and developed from a series of steps ( the SOW) , which leads to our judgement of a best supported opinion of market value ( expressed as a point value in most assignments.)
