MV opinion vs a price estimate

[glenn walker]

As The Judge looked at me and Screamed G. Walker can you just tell me what the property is worth ? Walker Responds yes your Honor I valued it at $300,000 and it sold at $300,000 and therefore we can all agree its worth $300,000. and Exhibit-A is a copy of my report and how I arrived at a Price of $300,000. The Judge looks at G. Walker AKA Angry-Cat and say good job I like that your quick to the point and not the usual appraiser lingo standing up here for 45 minutes wasting-court time explaining definitions and which market value definition was used. You can-step down Mr walker and now I will call J.G. Grant regarding her Exhibit-B as you and her are $25,000 apart on price.

Judge to J.G. Grant .
I see your Exhibit-B and its report and analyses indicate your Price is $275,000 or a $25,000 difference between the other appraisal. Can you share with us how you arrived at that price ? J.G. Grants response is yes your honor but I need to give you a lesson on the difference between a price Opinion and my Opinion of its Market Value. The judge responds with yes MS Grant but don't give the court a history lesson just the simple facts. Now J. G. Grants beady little eyes are preparing to educate Judge Hang-Um-High on the finer points of prices and values and why they are not synonymous or equal. Your Honor my Final Opinion of Market Value is $275,000 and we dont say Price or Worth and we only give final opinions of market values and therefore Walkers appraisal report is in violation of USPAP Standards 1,2,3,4,5,6,7,8, as its not a Market Value

Now Judge Hang Um High says to J.G. Grant I want the Bailiff to take MS Grant to to our County Mental Health facility for a 72 Hour Observation because all I wanted to know is whats the Subject Properties final Price and I dont care if its called Price-Value-Worth this court does not have time for such foolishness and make sure she is allowed to take her USPAP thingy handbook with her to read as 72 hours can get long and boring.

 

[George Hatch]

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[Mejappz]

Now Judge Hang Um High says to J.G. Grant I want the Bailiff to take MS Grant to to our County Mental Health facility for a 72 Hour Observation because all I wanted to know is whats the Subject Properties final Price and I dont care if its called Price-Value-Worth this court does not have time for such foolishness and make sure she is allowed to take her USPAP thingy handbook with her to read as 72 hours can get long and boring.

The poor patients there would slit their wrists ten minutes into the conversation.

 

[Mark K]

The poor patients there would slit their wrists ten minutes into the conversation.

These never ending threads are like listening to Vogon Poetry.

 

[RCA]

It's worth mentioning that the wording "most probable" that you find almost always find in real estate appraisal, - should be simply "expected".

Expected value vs. most probable value (mode)

The expected value of a distribution $f(x)$ is the mean, that is the weighted average value $$E[x]=\int_{-\infty}^{+\infty} x \, \, f(x) dx$$ The most likely value is the mode, that is the most

stats.stackexchange.com

Real estate sales data are discrete and usually lumpy distributions. The "expected" value is what is almost always desired since risk probabilities are almost always based on weighted averages of real sales, where the weighting factor is the frequency of occurrence. As an average, this number rarely occurs in the real world, thus as the above StackExchange posts indicate, the probability of ever getting it is invariably 0.

P(X=E(X))=0

However, if we want to be able to say the probability of getting a price higher or lower than X should be 50%, then we want the average or "expected" value, certainly not the "most probable" value.

And risk is central to appraisal.

So, the wording needs to be changed. If mathematicians were in charge of USPAP, FNMA guidelines, and such, then we should not have these problems. Yet, ...., disappointingly we are getting this confusion I guess from professionals, with degrees in math, who apparently lost interest in mathematics and logic after they graduated from school. One could argue, however, that most appraisers aren't going to know the difference, even if you explain it to them in detail, - and that we should all get used to the term "most probable price". Just don't try to win any arguments with it.

 

[residentialguy]

The appraiser's opinion is the appraisal result, the opinion of market value ( as defined ) of X $ ...... ( as defined links to the value definition for sale terms for the most probable price_. It is what it is, and what it is is an appraisal ! An apprisal is an opinion of value and an opinion of value is an appraisal . Yes we express it as a $ amount ( of the most probable price , as defined ).

That is correct... your report is not your opinion of market value. The last line is your opinion of market value. The report shows how you arrived at that opinion. That opinion of value is your opinion of the most probable price that property will sell on the effective date, under the confines of the definition.
The opinion of market value and the opinion of most probable selling price both need to fall under a defined conditions of sale so that everyone involved is on the same page. They are synonyms of each other, neither being facts... both are opinions. MV is simply the term used by the appraisal world.

 

[J Grant]

As The Judge looked at me and Screamed G. Walker can you just tell me what the property is worth ? Walker Responds yes your Honor I valued it at $300,000 and it sold at $300,000 and therefore we can all agree its worth $300,000. and Exhibit-A is a copy of my report and how I arrived at a Price of $300,000. The Judge looks at G. Walker AKA Angry-Cat and say good job I like that your quick to the point and not the usual appraiser lingo standing up here for 45 minutes wasting-court time explaining definitions and which market value definition was used. You can-step down Mr walker and now I will call J.G. Grant regarding her Exhibit-B as you and her are $25,000 apart on price.

Judge to J.G. Grant .
I see your Exhibit-B and its report and analyses indicate your Price is $275,000 or a $25,000 difference between the other appraisal. Can you share with us how you arrived at that price ? J.G. Grants response is yes your honor but I need to give you a lesson on the difference between a price Opinion and my Opinion of its Market Value. The judge responds with yes MS Grant but don't give the court a history lesson just the simple facts. Now J. G. Grants beady little eyes are preparing to educate Judge Hang-Um-High on the finer points of prices and values and why they are not synonymous or equal. Your Honor my Final Opinion of Market Value is $275,000 and we dont say Price or Worth and we only give final opinions of market values and therefore Walkers appraisal report is in violation of USPAP Standards 1,2,3,4,5,6,7,8, as its not a Market Value

Now Judge Hang Um High says to J.G. Grant I want the Bailiff to take MS Grant to to our County Mental Health facility for a 72 Hour Observation because all I wanted to know is whats the Subject Properties final Price and I dont care if its called Price-Value-Worth this court does not have time for such foolishness and make sure she is allowed to take her USPAP thingy handbook with her to read as 72 hours can get long and boring.

lol but it was your post so you made yourself the hero and me the nut job ! In my imagined court case it would be the reverse ! And the judge would rule in favor or my appraisal too!