How Precise Do You Need To Be?

[gregb]

Someone should waste some time to see if sale prices correlate to the odd listing prices found in many price ranges, some apparently set to meet MLS search parameters. List prices $699,999, $749,000 and last but not least, for the penny miser, $899,000.99.

 

[Terrel L. Shields]

Farmland is one property type where it might not look so strange to have a figure like the above, as the market typically rounds to the nearest price per acre, rather than a rounded overall price, in most cases.

Exactly, same for minerals. With deed stamps here rounded, number was always slightly higher. But now a statement page is added, gives exact amount, often to the penny.

 

[Terrel L. Shields]

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.

Bolshevik

 

[bnmappraisal]

I scanned through the first and last pages of this thread and haven't read the rest,

....didn't miss a lot from the middle parts

 

[residentialguy]

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."

_______________________________________________________________________________
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.

You don't put the subject down on the SCA grid as a comparable...it is already on there as the subject, therefore the use of the word "comparable" is appropriate because the comps are adjusted, not the subject on the grid. However, your error or your ways is your bias against the market participants of the subject. The subject sale can be as good of an indicator as any other pending sale, in fact it's superior, since you have no potential adjusting errors and you have the contract and finance in front of you...you know both the contract and property way better than any other comp.

As far as all you "OTHER" notations...you miss the boat completely. Market Value definition is a presumed sale of a typically motivated buyer and seller. That presumed sale is the focus - the sale they are talking about; therefore every contract, including that of the subject is an action of other buyers and sellers.

Standards Rules requires that an appraiser "not commit a substantial error of omission or commission that significantly affects an appraisal". Not considering a pending sale of an identical property could constitute an omission that might significantly affect the appraisal. USPAP requires appraisers to be complete in their analysis and convey that analysis in a way that is not misleading. We can't ignore market evidence We verify the conditions of that subject's sale more than with most closed sales. The meeting of market minds in a legally binding contract on the exact property can't be ignored and what you are suggesting is misleading, which would be a USPAP violation. I suggest you put your crayons away and stop.