MV opinion vs a price estimate

[J Grant]

I agree that a BPO is not the same as an appraisal... However your opinion of value is an opinion if the most probable price, as defined in the definition of market value used.

Sorry my friend, read USPAP.

A market value opinion is an opinion of a type of value ( market value ). It NEVER says in USPAP that a market value opinion is an opinion of the most probable price -

(even though the market value opinion includes a $ amount ). I am not trying to drive you nutz but it is an important distinction. To an appraiser and for an appraisal, the $ amount ( as defined )is always part of the market value opinion. Even though of course the $ amount represents the most probable price ( as defined in a MV definition)

Earlier in the thread a poster bought up a court case and IRS ruling a price is a fact (whereas a market value is an opinion ). It protects the appraiser in that we give market value opinions and not price opinions. If we gave price opinions, they could be proven or disproven with actual factual prices and most of us would be wrong, since there is no way we can predict or estimate actual prices ( Zillows big data algorithm failed at it too, causing hundreds of millions in losses lol ).

We can not predict or guestimate an actual price, but we can give a market value opinion as a $ amount ( with the type of value defined for a hypothetical most probable price belonging to the opinion

 

[residentialguy]

USPAP didn't have to say that because it is right there in the definition of market value.

 

[J Grant]

USPAP didn't have to say that because it is right there in the definition of market value.

Yes, but the definition of market value is not the same thing as an opinion of market value !!

That is where some appraisers go down a rabbit hole. The definition of market value is the most probable price, so they reason an opinion of value is an opinion of the most probable price.

But that is wrong. An opinion of market value is an opinion of a type of value ( as defined ), THE END. That is USPAP. That is what makes it an appraisal.

The market value definition * as defined ) is the qualifier for the type of value, stating the terms of sale for a hypothetical most probable price , which we conclude our OMV at as a $ amount

 

[residentialguy]

An appraisal is something that a licensed appraiser does. In a nut shell, they are regulated and held the standards. Their opinion of market value is the most probable price, as defined in the definition of market value. That most probable price is their opinion.

 

[J Grant]

USPAP didn't have to say that because it is right there in the definition of market value.

If USPAP intended to say it, USPAP would say it.


An opinion of market value opinion is an appraisal and an appraisal is a market value opinion. ( why whenever an appraisal gives a verbal or other causal $ amount to a property, they did an appraisal)

A definition of value is the type of value sought - in a market value purpose appraisal, we use a definition of market value.

Appraisal practice is appraisal practice because it develops market value opinions, not price opinions. I don't even know if a price opinion is USPAP compliant for an appraiser ! ( I don't want to spend my Sunday searching for it maybe someone else can)

 

[residentialguy]

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

The bolded section is a summation of the appraisal ( the steps we took in the appraisal) and the grand finale is the $ amount. Clearly, the appraisal is the market value opinion. The price is the culmination of it as a $ figure ( or range of value if that is the assignment instead of a point value. But the $ amount belongs to the market value opinion, it does not get separated out to a price opinon.

The certification (licensed appraiser) is the only thing that makes it an appraisal.

 

[J Grant]

An appraisal is something that a licensed appraiser does. In a nut shell, they are regulated and held the standards. Their opinion of market value is the most probable price, as defined in the definition of market value. That most probable price is their opinion.

An appraisal develops an opinion of value, whether a licensed appraiser or any other person does the appraisal

Having a licensed appraiser do it makes the appraisal is eligible for GSE and other types of uses, and other clients require a licensed appraiser. But it is the opinion of value that makes it an appraisal, not a license. Prior to 1990 there was no licenses for appraisers, but there was always standards, and what made it an appraisal was that it produced an opinion of market value ( not an opinion of the most probable price )

 

[residentialguy]

If USPAP intended to say it, USPAP would say it.

Argument from silence.
USPAP talks about market value. In that definition, MV is defined as being the most probable price, therefore, by definition, USPAP talks about market value being the most probable price.

 

[J Grant]

The certification (licensed appraiser) is the only thing that makes it an appraisal.

WRONG

Prior to the early 1990's , there WAS NO LICENSING for appraisers, but there were millions of appraisals done ! There was an AI and standards. What made them appraisals was that they produced an opinion of market value ( and were done to a set of standards )

An appraisal today does not need to be done by a licensed appraiser. But it needs to produce a value opinion to be called an appraisal. Having a licensed appraiser do it just makes it eligible for certain uses, such as GSE lender use.

 

[residentialguy]

WRONG

Prior to the early 1990's , there WAS NO LICENSING for appraisers, but there were millions of appraisals done ! There was an AI and standards. What made them appraisals was that they produced an opinion of market value ( and were done to a set of standards )

An appraisal today does not need to be done by a licensed appraiser. But it needs to produce a value opinion to be called an appraisal. Having a licensed appraiser do it just makes it eligible for certain uses, such as GSE lender use.

So If Joe the plumber says that your house is worth $500k.. is that an appraisal?