Opinion of Value is a Range

[Mike Garrett RAA]

Another fine reason to do away with appraisers..."they can't tell us what they think the property is worth!". Sorry guys...we get paid to give the client a number not a range of numbers.

The sales comparison approach does produce a range and then we, as appraisers, determine where within that range the value lies. I like using the language..."I have trended to the (higher, lower, or middle) of that range based on a number of factors such as marketability of the subject, condition, competition, etc. Usually it is only a couple of lines immediately following the grid...you know, in that area that says..."Summary of Sales Comparison Approach". 9 lines for comment there which is plenty of room to explain your reasoning.

 

[Mike Boyd]

[


The market approach was the worst indicator in this case. I actually liked my cost approach a lot.



YOU may have liked it better but YOU are not the lender. Where, in the cost approach, do you prove marketability? If the results of the market approach do not clearly demonstrate
market value then you have selected the wrong comps or made incorrect adjustments.

 

[CANative]

If the adjustments are reasonable then the mid range IS the most probable sale price by definition.

 

[ETex2]

I remember maybe 20 years ago there was talk among appraisal organizations that in the near future, all or most value estimates would be reported as a range, with no reconciliation to a single value estimate. I say if a lender prefers a range, let them get 3 appraisals of each property, and they'll get a range.

 

[Mark K]

I think that giving a value range is most likely the best approach and the most accurate method in today's market.

However, I've never done it and can't think of many situations where it would have any practical use. Most of my work is eminent domain, estates, divorces, some mortgage work, and a few misc.

Condemning authorities can't use a range; the IRS and probate courts can't use a range; the lenders won't/can't use a range; divorce lawyers don't want a range.

Maybe some of the misc. situations, (bank owned REO, potential real estate purchasers, pre-listing appraisals, etc.) can use a value range but in vast majority of cases, the clients can't use a range.

Where applicable/allowed, a range makes the most sense. I've appraised many pieces of real estate that later sold but I can't think of one time where the sales price matched my appraisal number exactly.