Opinion of Value is a Range

[Michigan CG]

I had a very challenging assignment where I used all three approaches to value with a pretty wide range of value indications.

The report was for a lender and in my final reconciliation of value I provided a range of value instead of a specific number.

Does anyone else occasionally do this when the assignment is very challenging and there is no clear specific value point?

 

[Laughing Heir]

I wish I could it on each and every assignment (big range/little range; confidence score; qualitative adjustments).


This should be made a sticky as it will surely stimulate an adult level of conversation. Good post Tim.

 

[Mejappz]

I agree as well. A value range makes more sense and is more realistic with how the Real Estate markets operate than a "fixed" or "single point" value.

 

[VolcanoLvr]

I have done so, but only on an assignment that was not on a Fannie/Freddie form, and was used only for a local bank 'in-house' lending purposes. In my opinion at the time, a range made more sense than a singular value.

I used the GP form from alamode.

On the F/F forms one must indicate 'a' value, not a range...unfortunately.

Should add that USPAP permits a range of value to be reported.

 

[lionfish]

Like the 'Antique Road Show' appraisers when they say things like "I can confidently say that it has a value from $5,000 to $15,000". Yes that would be fun. Mr. XYZ Lender my opinion of value for the subject property is from $100,000 to $200,000. $50,000 to $100,000 at auction and make sure you insure it for $400,000.

 

[lionfish]

If you provided an opinion as a range, which is more representative of the appraisal process, then the U/W's would have to make a decision regarding what value to use from within the range. This would make underwriting more complicated. More 'complicated' just wont do.

 

[jay trotta]

I think the argument could be made that; in analysis of the comparables a range is created between the number of comparables used, the end result is/could be - the "mid range value" of the comparables used.

So in retrospect, the Anitque road show, provides additional support for our theory(s)......

IMHO.....the value Range should be used, as it allows more freedom in the end result; we locate data based on the Lenders criteria of the assignemnt. That end result could most certainly provide enough support to use a Value Range (it could not be excessive as noted in the above post- unrealistic), guidelines for Net/Gross adjustments are already in place. Selecting a number from within a condensed set of numbers should be and would be a better consideration.
Because of current market conditions, as part of our analysis, we have been doing this for over a year now and usually under C-4 + is a breakout of data and notes a range from which we have applied the mid range theory. There are several old school theory's I provide to eliminate the potential "stips" and it has worked well in my area. It is past experience that applies to this market and offers a good basis from which to work from.
Lenders are getting more for less, but it is the only way I can produce a report confidently under the past/present market.

good luck in your neighborhood

 

[BRCJR]

If you provided an opinion as a range, which is more representative of the appraisal process, then the U/W's would have to make a decision regarding what value to use from within the range. This would make underwriting more complicated. More 'complicated' just wont do.

True picture. They do not want to make the LTV decision.

 

[jay trotta]

BRCJR -They do not want to make the LTV decision.

pssssssssst.........they cannot

 

[residentialguy]

Wouldn't that be nice if they would permit us to give a range. I always give a range in effective years, if that any consolation.