Narrative Residential Appraisal Report

[hastalavista]

Class-act response!

How does one provide "fair market value" as required by the state when there is no market for the subject property except for the state and my client without lengthy explanation and multiple analyses?

To your question above, you have what the AI's Advanced Sales Comparison and Cost Approaches course states is a "bilateral monopoly" where there is only one market with two participants for the property (in this case, the state and the owner). The property has no value to anyone outside of these two parties. According to the course, there is no economic theory that can provide a predictable point-value. At best, one can provide a range- what it is worth to one party and what it is worth to the other, with the actual value (transaction amount) being defensible anywhere in between. According to the text, the price is not determined by economic influences (supply and demand) but rather on the negotiation skills of the buyer and seller.

In my opinion, an assignment like this would be ill-communicated in a form presentation. :new_smile-l:

 

[c w d]

Class-act response!



To your question above, you have what the AI's Advanced Sales Comparison and Cost Approaches course states is a "bilateral monopoly" where there is only one market with two participants for the property (in this case, the state and the owner). The property has no value to anyone outside of these two parties. According to the course, there is no economic theory that can provide a predictable point-value. At best, one can provide a range- what it is worth to one party and what it is worth to the other, with the actual value (transaction amount) being defensible anywhere in between. According to the text, the price is not determined by economic influences (supply and demand) but rather on the negotiation skills of the buyer and seller.

In my opinion, an assignment like this would be ill-communicated in a form presentation. :new_smile-l:

Yes Denis, I remember your post about bilateral monopolies last month. At the time we had refused the assignment because of lack of experience. You had posted your post just days afterwards. It was very timely because the client came back asking us again to do it because he could not find anyone else to accept the assignment. We still attempted to find someone with experience in this type of assignment to take it, general and residential appraisers. None would do it. Finally, reluctantly, we accepted the assignment. And here we are today.