Do We Predict Or Not?

[J Grant]

AI- As defined in USPAP, an appraisal is the act or process of developing an opinion of value.

That's it. That's all she wrote. The fat lady sang. An appraisal is an opinion of value, not a value prediction nor prediction of value as an opinion or any other word salad.

Bruce- We build a model (sales adjustment grid, etc) to predict a value outcome.

USPAP- We build a model (sales adjustment grid, etc) to develop a value outcome.

Sorry to be a nag but important....

 

[J Grant]

Please define "complete visual inspection" TIA
(and post the Source)

RE, define it or find a source, you can do that if it interests you. I merely posted what it states on the SCA of the URAR for the statement of market value opinion.

 

[Mike Kennedy]

Don't ask me to define it or find a source, you can do that if it interests you. I merely posted what it states on the SCA of the URAR for the statement of market value opinion.

What Valuation Professionals Need to Know about ... - Appraisal Institute
blog.appraisalinstitute.org/what-valuation-professionals-need-to-know-about-fhas-han...
Jun 14, 2016 - The former Handbook emphasized a “complete visual inspection” of the property, ... Macappraisal report form used by all residential lending appraisers. ... The bottom line is that what isobserved by the appraiser during a ...


Golden Oldie 2005

4. What is expected with regard to the appraiser’s inspection of a property?

Fannie Mae’s expectation of the appraiser’s property inspection for an appraisal based on an interior and exterior inspection is a complete visual inspection of the accessible areas of the property. The appraiser is responsible for noting in his or her report any adverse conditions (such as, but not limited to, needed repairs; deterioration; the presence of hazardous wastes, toxic substances, or adverse environmental conditions; etc.) that were apparent during the inspection of the property or that he or she became aware of during the research involved in performing the appraisal.

The appraiser is expected to consider and describe the overall quality and condition of the property and identify items that require immediate repair as well as items where maintenance may have been deferred, which may or may not require immediate repair. On the other hand, an appraiser is not responsible for hidden or unapparent conditions. In addition, we do not consider the appraiser to be an expert in all fields, such as environmental hazards. In situations where an adverse property condition may be observed by the appraiser but the appraiser may not be qualified to decide whether that condition requires immediate repair (such as the presence of mold, an active roof leak, settlement in the foundation, etc.), the property must be appraised subject to an inspection by a qualified professional. In such cases, the lender may need to ask the appraiser to update his or her appraisal based on the results of the inspection, in which case the appraiser would incorporate the results of the inspection and measure the impact, if any, on his or her final opinion of market value.
http://www.bradfordsoftware.com/support/fannie_mae.html

 

[Artemis Fowl]

My main issue with referring to our analysis as a prediction is that is is not true ( unless we state it s the purpose of assignment ) That lay people, RE agents, and AVM's all "predict" or speculate on prices/their idea of value was used to contrast what we do vs what they do.

WHERE does it say in a MV appraisal that we are predicting a price or predicting a value? If that is what an appraiser is doing, then they need to state that "A price or a value prediction" as the purpose of the assignment. The problem with "prediction"" is it implies (or literally means to some) an expectation for that price to happen in the actual market . But that is impossible, we don't control the actual market, we can only control what happens within our appraisal.

Yes, we are we are valuing based on a hypothetical scenario, so leave it at that, the appraisal is a valuation model based in part on the hypothetical scenario of the SC approach ( and the cost approach is also a hypercritical scenario, unless there was a crew on site constructing a replacement or reprodction of the subject on eff date lol )

I suppose we can say at the end of our reconciliation... "I predict my own market value opinion will be 300k ! And then you state the MVO as 300k. ).

Don't over-complicate it. I argue that the appraisal process has elements that are predictive in nature...so yes, we predict things. I never suggested that we should refer to our value opinion as a "prediction". You extrapolated that somewhere along the way.

 

[Bruce Hahn]

AI- As defined in USPAP, an appraisal is the act or process of developing an opinion of value.

That's it. That's all she wrote. The fat lady sang. An appraisal is an opinion of value, not a value prediction nor prediction of value as an opinion or any other word salad.

Bruce- We build a model (sales adjustment grid, etc) to predict a value outcome.

USPAP- We build a model (sales adjustment grid, etc) to develop a value outcome.

Sorry to be a nag but important....

USPAP is a very slippery slope. It is full of inconsistencies and contradictions - particularly with respect to its definitions. Some are built on circular logic with no real foundation. I believe that "opinion of value" is one of them that is shadowy at best!

 

[Mike Kennedy]

Prospective Market Value "as Completed" and "as Stabilized ...
https://definedterm.com/prospective_market_value_as_completed_and_as_stabilized
According to USPAP, an appraisal with a prospective market value reflects an effective date that is subsequent to the date of the appraisal report. Prospective value opinions are intended to reflect the current expectations and perceptions of market participants, based on available data.

 

[J Grant]

USPAP is a very slippery slope. It is full of inconsistencies and contradictions - particularly with respect to its definitions. Some are built on circular logic with no real foundation. I believe that "opinion of value" is one of them that is shadowy at best!

That may be true, however we certify in our report we comply with USPAP and the definition of MV used..

I personally think USPAP is as you say inconsistent, one part brilliant one part idiot savant and way too cryptic and long winded. Imo the definitions of MV are pretty good. The appraisal model has limitations and that's by design.

 

[TRESinc]

We build a model (sales adjustment grid, etc) to predict a value outcome. We most certainly do NOT forecast market values. We are not that scientific nor does an appraiser's opinion of market value have a certainty of outcome!

from www.differencebetween.com (underline added is my emphasis)

"Prediction
Prediction comes from Latin Pre meaning before and dicer meaning to say. Prediction is a statement that tells about a possible outcome. Opinion polls are conducted before an election, and predictions about the winner are made based on the results of these opinion polls. Predictions are risky in the sense that despite taking help from previous cases, they remain uncertain. Despite this uncertainty, companies and even governments take help of predictions made by experts and analysts, to undertake or reject certain projects. It is hard to predict about the success or failure of a newcomer in any field, be it sports or movies though there is no dearth of people making a claim of having known beforehand about the success of a star.

Forecast
Telling or giving information about a future event, before it has taken place, comes in the category of forecast. Before the advent of modern scientific tools and equipments, experts foretold about the likelihood of an earthquake based on abnormal animal and bird behavior, which was unscientific and closer to prediction. However, forecasting today is much more scientific and analytical with a far greater accuracy than at any time in the past. Forecasting makes use of scientific principles and allows error analysis. Forecast of weather is, therefore, accurate up to 90%."

that's great, but we as appraisers still do not predict anything. others may take our report and use the data it contains to make a prediction however we are not the "others" (which falls right in line with the voting poll example). your definition goes on to state that predictions are risky in the sense they remain uncertain. this is not the case with an appraisal. i am 100% certain of my opinion of value for the effective date (which happened in the past already). the opinion of value we determine has already happened when the report is complete - it is as of the effective date, which at best is the same date the report is completed and most probably a date in the past. it is impossible to predict a value in the past by the very definition you used.

USPAP is a very slippery slope. It is full of inconsistencies and contradictions - particularly with respect to its definitions. Some are built on circular logic with no real foundation. I believe that "opinion of value" is one of them that is shadowy at best!

doesn't sound like a good enough reason not to comply with it, but you go right ahead and try. be sure to report back to us what your state board finds you doing wrong