Opinion of value below contract price

[ATNA]

Hello everyone,
Not sure how often people get asked this but it's a first for me. The AMC wants me to comment on the opinion of market value coming in below contract price. I want to say "its the whole narrative and analysis of the report, along with my reconciliation" and leave it at that. Does anyone use a "canned" response to these requests?

 

[shrubberyvaluation]

Never been asked this before.

I'm assuming its market value. But yea its basically read the report for the analysis including the sales comparison section. If personal property is left behind or the contract includes a car or something you could mention it, but that should of been discussed in the contract section and u can point to that.

If you want something canned you can point to or copy paste the definition of market value.

 

[Fernando]

Been asked many times and have different answers.
Reviewer wants dumb appraiser to be aware of the difference because appraiser didn't mention the discrepancy.

 

[Terrel L. Shields]

That's because the dum*** that priced it, priced it too high, and the buyers were stupid enough to pay that... See how they like those apples.

 

[Webbed Feet]

A sale price, or contract price, is often the result of negotiations between separate parties typically acting emotionally in their own best interests (biased) without regard to standards, definitions, or concerns for ethics. An expression of market value by a real estate appraiser is quite different as it is the opinion of one individual required to follow or consider guidelines, standards, definitions, and ethics. Therefore, there is no discrepancy as the former is a fact while the latter is an opinion. Additionally, the latter did not "come in" relative to the former as it wasn't a horse race and no known gambling by any involved party was disclosed.

 

[J Grant]

Any time my opinion of market value is higher or lower than the SC price, I provide a comment - which I am not happy about, but by now, it is a client expectation. I don't wait for them to ask, I provide it when I send the appraisal
Sometimes there is a contributing factor for the price: - furniture was included, or concessions or unarmed length terms.
Other times, there is no clear reason - it is what it is. They have a price, and we have a market value opinion developed from the appraisal.
I might write along the lines of:

"The sale contract price is above the opinion of market value. The sale contract price is negotiated between parties and can reflect individual buyer and seller negotiations. The opinion of value in the appraisal is developed from considering the most recent data, including the contract, with the most reliance placed on the sales comparing the approach of the comps as adjusted, resulting in an opinion of the market value of $X....,."

 

[Elliott]

Well, you could tell them how spectacular Comp. No. 1 and No. 2 are, how they bracket the subject and how they provide convincing evidence to support your objective, unbiased opinion of the value of the subject as of the date of the appraisal.

 

[sputnam]

Hello everyone,
Not sure how often people get asked this but it's a first for me. The AMC wants me to comment on the opinion of market value coming in below contract price. I want to say "its the whole narrative and analysis of the report, along with my reconciliation" and leave it at that. Does anyone use a "canned" response to these requests?

Mostly they want you to state that you are aware that the appraised value is less than the contract price... and that your value is supported by the market. If, as noted above, there is some discernible reason... like the contract price includes a new boat... then you talk about that.

 

[KHS445]

Been asked many times and have different answers.
Reviewer wants dumb appraiser to be aware of the difference because appraiser didn't mention the discrepancy.

Truer words of self-reflection have never been spoken!

 

[J Grant]

All good posts - I provide a statement, as I noted, but I resent having to do it, and this nonsense came about because back in the day, lapdog number hitters would write a mea culpa groveling statement about why their appraisal was below a SC price - for the two times it happened in their career I suppose - and thus we got stuck with it as a client expectation.

If a statement about why a value opinion does not match a contract is needed, then the same statement should be made when th eSC price and the OMV match. In all cases, the statement is the same - the appraisal supports the market value opinion, regardless of the SC price - but when it matches, the SC price as an additional value indicator.