Opinion Of Value Vs Estimate Of Value

[Oregon Doug]

Lee Ann started a topic in here a while back about using opinion of value or estimate of value in your reports. I didn't give it much thought at the time but now I am researching this more carefully. Here is one of the things I found (it has to do with a buyer who paid too much for a house and is now suing mortgage co, appraiser and everyone else he can for fraud).

Block v Lake Mortgage Co. Court of Appeals of Indania 10/29/92:

Fraud, 184k11(2): Appraisal of real property conducted by appraiser hired by mortgage company was opinion, and thus, appraisal was not actionable under theory of fraud.

73,254 (2/21/90): "an appraisal of property is not the result of a scientific analysis, but is, rather, a subjective opinion whic can and does differ from the next appraisal even though both may be based on current real estate market trends. [citatation omitted.]" The trial court correctly concluded that the appraisal was an opinion and, thus, not actionable under a theory of fraud.

So now you know - opinion of value or estimate of value?

Oregon Doug

 

[Pamela Crowley (Florida)]

Uhmmm, I pick "Opinion"!!!

 

[GeorgiaBoy]

Excellent find Doug. LOL, I pick "opinion" also. Just another one of the many things things that I have changed in my reports since I joined the forum.

 

[Farm Gal]

Doug:

You are correct in that it is NOT a trivial matter, howver I do believe that there is sufficient precedence to make our final values 'opinion'.

The rub comes in (as with the rest of this 'scope' dependence), in deciding to what extent we must document (at least) the following!

1. What we were attempting to do, (value wheeech value?)
2. Who we did it for,
(AMC, Lender, Owner, buyer, Legals system takings estate.. blah blah bunches- have we any known?)
3. What they are going to do with it (I need an appraisal )
4. Why we did it,
(so's they could get a loan close an estate divorce or win a suit in court~amounting to the same thing)
5. How we did it and last but not least
6. In what manner are we attempting to convey our result!

The problem I have with Scope and all the rest of the quirks evolved in the last few years, is that in place of the former generally understood appraisal meant verbal, narrative, or form X (typically a 1004!), we have evolved a puzzling array of products methods and conflicting 'needs'.

Most of which leave a well-intentioned, reasonably well educated, ethical appraiser potentially subject to great liability as some court interprets from a different roolebook.

Actually I think it would greatly behoove us as an industry to redefine 'typical' practice in office OR in a public place and then let it rip on the important stuff within a report!

It seems that one cannot operate other than selling your work by the pound under the current rules (if you want to be in compliance).
It seems the guys makin' the $$ are just ripping off single form no addendum reports and running for the bank . Nevermind what they are doing with their values.

Point being at the end of the rather interesting thread: NO one would not HAVE to place 'opinion' in ones report... but it might be wise... anyway. and one shoudl also put in a bazillion other things and then if you omit one your are dead in the water and they are shootin anyway

Whats a girl/guy to do?

 

[Don Clark]

B) I raised this issue in the USPAP Instructor course this past weekend. Response: S B) ince an appraisal, by definition, is an opinion of value, to call it something else would be misleading and cause a report to be less than credible. But hey, what do they know. After all they are just members of the ASB.

Don

 

[Larboard]

I have been giving the opinion vs. estimate question some more thought too. I believe (it is my opinion) that USPAP could be an asset in a situation as described in the original post.

The USPAP definition of market value, MARKET VALUE: a type of value, stated as an opinion, … is just that, a definition. It tells us what Market Value IS.

It is not a condition as in MARKET VALUE: a type of value, WHEN stated as an opinion, …

Nor is it a directive as in MARKET VALUE: a type of value, TO BE stated as an opinion, …

It is a definition. I tells us that MARKET VALUE is a type of value and that it IS a statement of opinion.

So the phrase “Final estimate of Market Value is $zzz” is, by definition, an opinion.

The same actually applies to any value, not just market value. See the USPAP definition of VALUE and its comment.

Some people seemed to think that these definitions of value constrained them in their appraisal practice. I couldn’t think of a situation where I would run into such a limitation. But I have been in this business a very short time. Others of you may in fact have experienced such a constraint. If you have please tell us about it.

Of course, outside the scope of USPAP, these definitions may not apply. The definition of value in scholarly discussions of economic theory may be entirely different.

As I mentioned earlier, I am very new to this business. I do not have the historical perspective (nor the historical baggage) that many of you have regarding changes that have been made to the definitions over the years. I think the definitions are a necessary part of USPAP. We can’t have a “Standard” if we don’t have a common understanding of the terms used in that standard. Granted, the definitions could have been written more clearly. They will never be effective (affective?) as long as there is any possibility of multiple interpretations.

Some members of the forum have recently completed a USPAP instructors course. Did the question of opinion vs. estimate come up for discussion? If so, was there a consensus on what the definition of Market Value means?

Don, saw your post after I wrote this. But still not clear what they mean. Are they saying that the word estimate should not be used in regard to Market Value? Are they equating Market Value with Appraisal? My head must be getting thicker by the day. I’m not getting this.

Bruce

 

[Terrel L. Shields]

Response: S  ince an appraisal, by definition, is an opinion of value, to call it something else would be misleading and cause a report to be less than credible.

Then you should ask him what Black's Law Dictionary defined an appraisal as.

hint, not an opinion.

pps - I still think eventually appraisers will be rendering "opinions" of market value, and evaluators, AVMs,etc. will be 'estimating" or "determining" value for the majority of property upon which mortgage lending is made available. We will be come dinosaurs used only on the larger more complex properties, because there will be too few of us to carry the load.

 

[Austin]

I think this is another of those appraisal circular references. An appraisal is an opinion because ten appraisers can appraise the same property using the same data and come up with ten different answers. At least that is what the court reasoned in the original post of this thread. Now, if ten appraisers appraised the same property using the same data set and all came up with the same price, and then it would logically be an estimate. So, it would seem that in the mind of the court that the difference between an opinion and estimate of value is that an opinion of value is so personalized that it can’t or not likely can be duplicated by another appraiser but an estimate could be duplicated. I once read that was the very reason that appraising was not considered a true profession. That leads to another logical deduction: What the hell does standard 1-1A mean? How can you have accepted standards, practices, and appraisal methods that are so personalized that no two people can come up with the same conclusion when using the same methods on the same data? On that basis, how could a state board charge any one with a violation of standard 1-1A? The only thing that could be enforceable would be report content.
I notice the date of this cited court case is 1992, and I mentioned in the first thread on this subject that the ASB changed the definition of appraisal to opinion to avoid legal liability. At the same time the ASB shot themselves in the foot because no true profession can be recognized under those circumstances. Kind of like "Political Science." Everything in politics is an instance of one occurance of an event and instances of one occurance is not science so how can politics be a science? It is not. It is a cult of idiots. Did any one watch the great debates last night? See what I mean.

 

[Terrel L. Shields]

The only thing that could be enforceable would be report content.

I think that you will find that is the most common actions taken by boards, it deals entirely with the report format, content, etc.

"Political Science." .... It is a cult of idiots.

Excellent definition

Did any one watch the great debates[?]

Debates...how worthless. Ask a question and the candidate answers something else. Did any one of them answer the question being asked??ever??

 

[Ross (CO)]

Debates, what debates ?.....that was a circus act with 9 seals leaning up against their respective podium. They need a ringmaster....and they ain't got one. I see a Reagan-Mondull re-match scenario 14 months from now.