FNMA
"Definition of Market Value
Market value is the
most probable price that 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:
- buyer and seller are typically motivated; <<< DEMONSTRATED BY OTHER BUYERS AND SELLERS OF OTHER, COMPETITIVE PROPERTIES
- both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest;
- a reasonable time is allowed for exposure in the open market; <<<< AVAILABLE TO OTHER BUYERS
- payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
- 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. <<< "NORMAL" consideration demonstrated by OTHER competitive sales by OTHER sellers and OTHER buyers.
Note:
Adjustments to the comparables must be made for special or creative financing or sales concessions.
No adjustments are necessary for those costs that are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable because the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the
comparable property by comparisons to financing terms offered by a third-party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession, but the dollar amount of any adjustment should approximate
the market’s reaction to the financing or concessions based on the appraiser’s judgment."
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IOW:
"comparables" =
OTHER properties NOT a subject.
"normally" = paid by OTHER sellers of OTHER properties,
"market's reaction" = demonstrated by other buyers and sellers of OTHER properties, not a subject property
An appraisal (residential) reflects an Appraiser's qualified, OPINION derived from and supported by the actions of OTHER buyers and OTHER sellers of directly competitive properties "AS-IF" (Hypothetical Condition) a subject property was sold on an Effective Date of Appraisal.
Who the parties involved are, whether there is a Lender or not, whether an assignment is a SALE transaction appraisal, or not AND Whether a subject is actually active or under contract as of an effective date, OR NOT, is absolutely IRRELEVANT.