MV opinion vs a price estimate

[J Grant]

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal

See my clarification. It's not our job to determine the random price that two people will come up with, but if they are acting prudently, knowledgeably, and without undue stimulus, then our market value should match.

Thankd for the clarification.

Indeed it is not our job to determine a random, two actual people will agree on, even if those two actual people behave in all the ways the MV definition state. However, expecting our market value opinion to match their price still not the goal, since it imposes a burden to predict some incredibly accurate exact price of actual people.

What we can do is opine our best supported MV opinion - and the opinion as a most probable price should be very close to a real world price such as you describe. When we are doing a purchase appraisal, it is fine to refine our point value at a CS price $ amount if we choose, and explain why. But our OMV and the SC price still are not one and the same thing ( I recall a past FAQ in USPAP called them the same, but imo this was not a correct way to express it - thankfully FAQ is not literally USPAP )
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Remember this, when an appraisal is reviewed, the reviewer is asked do you agree or disagree with the market value opinion. the reviewer is not asked do you agree or disagree with the CS price. Which clarifies they are not one and the same thing, they remain separate things even if the $ amounts match.

The market value opinion belongs to the appraisal, the SC price belongs to the sale contract.

 

[J Grant]

In other words, an appraisal is an opinion of price.

OMG !! Help...... No, an appraisal is not an opinion of price ( unless assignment asks for a price opinion. But what separates appraisers is the appraiser gives a market value opinion, others are hired for price opinions, such as a RE agent's Broker Price Opinoin, or BPO

 

[J Grant]

The below hopefully explains why it is a market value opinion , not a price opinion ( the below taken from the URAR ) using an example $ amount

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal

my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ 300,000 , ( Where does this say it is a price opinion? )

Just because the MV definition uses the term most probable price, does not mean our market value opinion is a price opinion. It remains a market value opinion, expressed as a most probable price $ amount .

 

[JeffSH]

What we are doing is opinion an opinion of market value at a most probable price EQUIVALENCE - ( most probable price at the terms and condiitions of the used MV definition )

What is an appraisal used for? It's to verify a reasonable price. I'm doing a private assignment where they've come up with something, but the seller thinks it's too low. I'm not being given the contract price. My job is to determine a reasonable price for the transaction.

Or in a situation where the owner just wants to know how much his house is worth. Our value is the most reasonable price that the home would fetch assuming it was exposed to the market.

Our opinion of value is a price, or range of prices, based on a knowledgable buyer/seller acting prudently. Value is a price with specific stipulations. Not all prices are equal to value, but market value is indeed an opinion of price.

 

[JeffSH]

It remains a market value opinion, expressed as a most probable price $ amount .

Market value can be thought of as a function based on independent prices, so I do agree that market value is not exactly the same thing as a price, but I think this is just theoretical semantics. The people who use our appraisals want to know the value. But value can only be actualized through a price.

 

[J Grant]

What is an appraisal used for? It's to verify a reasonable price. I'm doing a private assignment today where they've come up with something, but the seller thinks it's too low. I'm not being given the contract price. My job is to determine a reasonable price for the transaction.

Or in a situation where the owner just wants to know how much his house is worth. Our value is the most reasonable price that the home would fetch assuming it was exposed to the market.

Our opinion of value is a price, or range of prices, based on a knowledgable buyer/seller acting prudently. Value is a price with specific stipulations. Not all prices are equal to value, but market value is indeed an opinion of price.

A clients USE of an appraisal is different than the appraisal stated purpose.

Stated purpose : Derive an opinion of market value. the OMV is 300k. A client's use of that can be to justify a contract price, base a loan LTV on, decide to keep it or sell it or how much rent to charge etc. Appraisers get into a rabbit hole when they start mixing up a client;s use with the appraisal purpose.

. Not all prices are equal to value, but market value is indeed an opinion of price.

Close but no cigar @@ . For an appraiser, MV is an opinion. An opinion of value ( a MV as defined ) supported by the appraisal; Even though the terms "Market value," or "value " is also used by participants and the public. An appraiser can have a generic concept of them too, but still must use them as stated in the appraisal.

. WRT saying market value is indeed an opinion of price. Not, it is not. MV is an opinion of market value , expressed as a price $ amount. It is not just semantics, it is critical to what an appraisal is . ( and what an appraisal is not )

 

[JeffSH]

A clients USE of an appraisal is different than the appraisal stated purpose.

Stated purpose : Derive an opinion of market value. the OMV is 300k. A client's use of that can be to justify a contract price, base a loan LTV on, decide to keep it or sell it or how much rent to charge etc. Appraisers get into a rabbit hole when they start mixing up a client;s use with the appraisal purpose.

Come on, now you're just being silly. The intended use doesn't matter? The purpose of an appraisal is to provide an opinion of market value and market value is a price or range of prices.

 

[The Warrior Monk]

Definitions matter.

Without specifically defining what “market value” and “price opinion” are, it’s simply everyone arguing about personally defined terms.

 

[CGinMN]

Market value is identified and defined by the appraiser within the context of a specific appraisal assignment. Market value (as appraisers use the term outlined in USPAP) is not always the same thing as "price estimate," which can mean whatever anyone (appraisers, users, non-users) wants it to mean because nobody has defined it and everyone is working from different definitions. USPAP cautions appraisers to "identify the exact definition of market value, and its authority, applicable in each appraisal completed..." I can't help but think this is one of the reasons why using exact definitions is important. When exact definitions aren't used, the kids at the front of the class get into semantical arguments. So where does that leave us? With the need to define the terms.

My head is spinning from another thread where people were saying a price estimate or price prediction and a market value opinion are one and the same .

Since you can't even agree on what "price estimate" means, and you haven't identified what definition of market value you're using, this debate will never resolve itself.

 

[J Grant]

Come on, now you're just being silly. The intended use doesn't matter? The purpose of an appraisal is to provide an opinion of market value and market value is a price or range of prices.

I did not say an intended use does not matter. But the intended use does not change the stated appraisal purpose. Are you saying it does ? That is the slippery slope-

Stated purpose is provide an opinion of market value. Correct. and market value is expressed as a price or a range of prices. Correct. Which does not change it into an appraisal gives a market price opinion, or the appraiser gives a price opinion.

It is a market value opinion, and it can match, exceed, or be below an actual price. Apraisers should be able to explain why , and that explanation can help guide a client in their use. The client does not always like to hear what an appraisal tells them of course.