Disposition Value Form

[J Grant]

11% less is not that big a deal. Talk to your client I think you are on the wrong path is this your first assignment of this type? And what are you referring to they want the "price it will sell for", either they want a MV opinion or they don't.

 

[residentialguy]

And what are you referring to they want the "price it will sell for", either they want a MV opinion or they don't.

If they are getting an appraisal on the property to list it, they would not want MV . It will sit there, just like the prior listing did.

 

[Deleted member 134708]

The assignment comes with a "communication letter from zzz bank with their seal on it etc.

I can copy paste their 1st paragraph titled "purpose" but don't think good idea. It states to set a list price. It was listed at $405K and reduced bunch of times then pulled from market.

 

[J Grant]

Setting a listing price is a different assignment than a MV purpose appraisal on a 1004 form.

 

[residentialguy]

The assignment comes with a "communication letter from zzz bank with their seal on it etc.

I can copy paste their 1st paragraph titled "purpose" but don't think good idea. It states to set a list price. It was listed at $405K and reduced bunch of times then pulled from market.

You NEED to contact them and get clarity. That is directly from USPAP. Intended use is based upon communication. They may need to be schooled as to what MV would give them and how DV/LV would reflect their purpose.

"In order to properly define the problem under study and to understand his or her responsibilities in an assignment, an appraiser must identify the client and other intended users. This is accomplished by communication"

 

[George Hatch]

You guys need to pay attention to what the definition of value being used actually says and refrain from loading additional assumptions that are not included in those definitions.

An exposure time estimate for market value (which you would presumably extract from your comparable sales data) at 6 months means the property is expected to sell from the typical seller to the typical buyer within that period of time; same with Disposition Value except that the exposure time may have an arbitrary external limitation that is not market oriented.

If the typical exposure time for MV transactions in that market segment is equal or less than the specified exposure time in a Disposition Value assignment then it stands to reason the two value conclusions will often be the same. Same with Liquidation Value. There's nothing in the definition of LV or DV that will automatically result in a lower value conclusion in all cases; it will only be lower when the specified time frames are actually shorter than the typical exposure times for MV.

The *only* assumption about the seller that's different within the definition of Disposition Value or Liquidation Value is that the seller is compelled to sell within that arbitrary time frame. Those definitions say nothing about the seller being a lender or an REO company or those sales being made under distress conditions except to the extent that the arbitrary time frame are actually shorter than what's common in the market. As in "if" they're actually shorter.


I've had LOTS of assignments calling for DV and LV where my value conclusions were the same as for the MV conclusion due to those markets being hot enough that most transactions are occurring in short order anyway.


Loading more assumptions into the value conclusion than are stated in the definition of value being used can lead to misleading/not meaningful situations that we would normally choose to avoid.

If the client wants to load a "marketed as an REO/distress sale" assumption into an assignment calling for DV or LV that would be an assignment-specific assumption, aka an Extraordinary Assumption, which (if you think about it) should technically be spelled out separately.

A giraffe is not a horse with a long neck.

 

[jay trotta]

George,

A giraffe is not a horse with a long neck

How have you been, long time - no see, classic

 

[J Grant]

The difference between liquidation value and market value is also marketing effort, with LV typically defined as having a severely limited marketing effort.

Important distinction; stated in most definitions of DV that the seller is under extreme compulsion to sell AND CONSUMMATE the sale within the time frame (30 days, 60 days etc), Which is far more stringent than the MV definition which states reasonable market exposure taking place prior to hypothetical consummation of the sale. Disposition value is a definition with limited marketing effort and seller is under compulsion to sell and consummate with typically longer DOM than seen in LV.

The Giraffe analogy is a good one.

 

[residentialguy]

You guys need to pay attention to what the definition of value being used actually says and refrain from loading additional assumptions that are not included in those definitions.

It's not so much the market exposure (as we are in a market of 30 days anyway) as it is the compulsion to sell. That's where the large distinction is, imo. It's that sale where the buyer has the seller at an unfair advantage.

I also think that the intended use must be considered as REOs are a sale of greater risk involved for the buyer...they typically don't have the same bundle of rights, hence why REOs should be used as comps, when possible.

 

[J Grant]

REO properties typically have the same bundle of rights as any other property. If they have a lien against them that is another matter. What comps to use is a whole other discussion one that's been had many times!

To summarize, it is not only the days of market exposure, its the compulsion to sell AND consummate (close) within that X period of days imposed by client in LV or DV versus X days on market prior to hypothetical consummation as well as degree of marketing effort..

Did the writers of definition have a sense or humor using the words consummate and exposure.?