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MV opinions vs price : ( apple example )

J Grant

Thread Starter
Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
In Final Reconciliations when doing reviews I see two or three used commonly that refer to Sales Price which is then converted to market value.

1- The Sale's price Falls withing the range of value "hence" the Sales price is considered market value. BAD

2- Increasing Markets : A reasonable range of value was the comparables sales The compo prices were between $300,000 to $325,000. Due to increasing market trends with the higher end of the range being the most Probable point of price and opinion of market value is $320,000 as of the effective date. OKAY

3- The comparables sales prices after adjusted indicate a range of $300,000 to $325,000 supporting the Subjects Sales Price of $325,000. Final opinion of market value is 4325,000. BAD - An appraisal is not done to support a SC price, an appraisal is done to support a market value opinion. ( the SC price can support the opinion of market value, not teh other way around )
 

J Grant

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Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Someone isn't going a very good job in that case.
And you make that assumption how, from Tennessee and not having seen any of the appraisals? 60% statewide was due to a crazy set of market conditions, why do appraisers jump to conclusion it the appraisers faults?
 

glenn walker

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Oct 11, 2006
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Certified Residential Appraiser
State
California
My guess is many Florida are older ones who were used to appraising lower value type of properties and they have been overwhelmed in the last 2 years with a market that is out of equilibrium which creates a market where buyers no longer consider value and its all about sales prices and monthly payment driven purchases. Therefore while wanting to believe they are valuing a property the appraisers are really just chasing the sales prices and they cant keep up. The truth is in markets like this one the definition of market value needs to be amended as its misleading to clients and intended users and when it really is misleading is when appraisers no longer believe what they are signing. I only completed one assignment last year where I believed the buyers had purchased a good and fair value. The others where on ones where I had enough recent high sales prices on the comparables to be able to come in at or even above the purchase contract price.
 

George Hatch

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Certified General Appraiser
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California
Stop assigning perceived emotional attributes ( lost control of yourself ) to denigrate what I am saying ( otherwise known as gas lighting)

Well guess what in this market in FL, 60% of the appraisals were lower than the SC price ( just ask D Wiley)

And to make the assumption most properties under SC are worth the SC price if 80/100 or 90/100 appraise...sorry but but 1) that does not account for all the "dead " deals that never get to loan stage due to a lower OMV, and 2) fewer would appraise for SC price if there were true separation of appraisal practice from business pressures, which was not achieved except to a small degree by AMC regulatory shift. A reason the agencies gave for exploring alternates to appraisals is they found 90% came in at SC price - now they are doing an about face and trying to get more at SC price ?-

WRT appraisers who see an explosive market trend are not adjusting for it.... I can't refute that but seems odd, since most appraisers will make a market condition adjustment when noted in market. Though an "explosive" price rise may not meet the terms and conditions of sales at MV, - which explains why in past recent months, when the market was "exploding", I saw up to half the SC having appraisal waiver clauses ( with either the buyer to pay $ over a lower value up to the full SC price, or buyer agreeing to pay 10k or X $ over a lower value up to SC price ) See , that proves even the RE agents and buyers recognized their SC could be above "market value", even if you refuse to believe it.


Now prices are somewhat stabilizing even though in some cases still appreciating, though I do see a flattening trend. I see far fewer of the appraisal waivers in contracts
You just got done accusing me of being biased because I made the (factual) observation that most properties under contract have been worth the contract price. You do realize that we can see the sales histories of these listings, including the ones which end up falling out of escrow.

I show the DOMs and do a s/l ratio on every comp I present in an SFR appraisal report and I comment on those outcomes. So when I comment in a report that all of the closed sales sold at 99or higher than their list and apply the same pattern to my active listing in the SC grid as it is my expectation at that point that the active will perform the same way the closed sales have performed.

I've been doing it this way for many years, going back to the previous RE cycle. When the market was in decline and my sales were closing at 20% under the list and my lists were already at the bottom of the range I was doing it then, too: (List - 20%) due to that being the prevailing trend.

I'm tryna let the data speak for itself as much as I possibly can. In a decreasing market I'm going to be at or below the bottom of the adjusted range; in an increasing market I'm going to be at or above the top of that range. And anyone who want's to say I'm wrong (or biased) had better bring their data with them.
 

J Grant

Thread Starter
Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
There are market conditions ( which affect lots of prices ) and there is the definition of market value ( a specific property transaction set of terms that produce the most probable price )

Some appraiser seem to confuse the two - or at least in how they post about it.

Market condition adjustments reflect market trends of prices of a large number of properties. A market value definition is used in appraisal to vet the terms of sale of a siogle transaction, - a hypothetical model transaction to vet an actual subject SC price , and to vet Comp sale prices. (or pending /list prices.)

An assumption that most houses are worth the SC price because of list to sell ratio or because X % of appraisals? Already commented on and refuted okay not going to belabor it.
Moving on, in a stable market, one would expect more SC prices to be at a market value opinion equivalent price. In a rising market, one might expect more sales contract prices above a market value opinion and in a declining market, one would expect more SC prices below a MV opinion -
 
Last edited:

J Grant

Thread Starter
Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
My guess is many Florida are older ones who were used to appraising lower value type of properties and they have been overwhelmed in the last 2 years with a market that is out of equilibrium which creates a market where buyers no longer consider value and its all about sales prices and monthly payment driven purchases. Therefore while wanting to believe they are valuing a property the appraisers are really just chasing the sales prices and they cant keep up. The truth is in markets like this one the definition of market value needs to be amended as its misleading to clients and intended users and when it really is misleading is when appraisers no longer believe what they are signing. I only completed one assignment last year where I believed the buyers had purchased a good and fair value. The others where on ones where I had enough recent high sales prices on the comparables to be able to come in at or even above the purchase contract price.
Will answer later, running short on time
 

Mark K

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Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
Clearly your participation is to make snarky remarks about me. THAT is a waste of band width. Clearly you did not bother to read these threads. Bye have a nice day...
No, I actually read most of them, hence the dead-horse-beating comment.

Bye, have a nice day.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
You just got done accusing me of being biased because I made the (factual) observation that most properties under contract have been worth the contract price. You do realize that we can see the sales histories of these listings, including the ones which end up falling out of escrow.

I show the DOMs and do a s/l ratio on every comp I present in an SFR appraisal report and I comment on those outcomes. So when I comment in a report that all of the closed sales sold at 99or higher than their list and apply the same pattern to my active listing in the SC grid as it is my expectation at that point that the active will perform the same way the closed sales have performed.

I've been doing it this way for many years, going back to the previous RE cycle. When the market was in decline and my sales were closing at 20% under the list and my lists were already at the bottom of the range I was doing it then, too: (List - 20%) due to that being the prevailing trend.

I'm tryna let the data speak for itself as much as I possibly can. In a decreasing market I'm going to be at or below the bottom of the adjusted range; in an increasing market I'm going to be at or above the top of that range. And anyone who want's to say I'm wrong (or biased) had better bring their data with them.

No, I actually read most of them, hence the dead-horse-beating comment.

Bye, have a nice day.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
The horse is not yet dead we have to continue until it takes its last breath : )
 
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