Personal opinion Vs' opinion of market (value)

[Greenback]

Comparable sales approach - Example (in the form of a question): You are appraising a residential property, you start extracting (paired sales) - etc.., then you reconciliate, come up with an opinion of value; you start thinking to yourself, this property shouldn't appraise for that much or vice versa.

Now, would you go by your personal opinion that this property shouldn't appraise for the value indicated after you properly extracted, reconciliated etc.., ORRRR, would you go by your opinion of what the market is saying?

Do you think there is a difference between a personal opinion of the market value and an opinion of what the market is saying?

I'm done, I'm ready for opinions, facts, and additional explanations...

 

[Michigan CG]

Thread moved to more appropriate location.

 

[BRCJR]

Comparable sales approach - Example (in the form of a question): You are appraising a residential property, you start extracting (paired sales) - etc.., then you reconciliate, come up with an opinion of value; you start thinking to yourself, this property shouldn't appraise for that much or vice versa.

Now, would you go by your personal opinion that this property shouldn't appraise for the value indicated after you properly extracted, reconciliated etc.., ORRRR, would you go by your opinion of what the market is saying?

Do you think there is a difference between a personal opinion of the market value and an opinion of what the market is saying?

I'm done, I'm ready for opinions, facts, and additional explanations...

You should always state what the market tells you, and always state a professional opinion, not a personal opinion, IMO.

 

[Lawrence R.]

Comparable sales approach - Example (in the form of a question): You are appraising a residential property, you start extracting (paired sales) - etc.., then you reconciliate, come up with an opinion of value; you start thinking to yourself, this property shouldn't appraise for that much or vice versa.

Now, would you go by your personal opinion that this property shouldn't appraise for the value indicated after you properly extracted, reconciliated etc.., ORRRR, would you go by your opinion of what the market is saying?

Do you think there is a difference between a personal opinion of the market value and an opinion of what the market is saying?

I'm done, I'm ready for opinions, facts, and additional explanations...

Hmmm..Very good question. I view myself as a reporter, not an editorial writer. If the market data says X, then it is X.

If I truly have a "hunch" about the data not shaking out right, and my experience is just telling me something is wrong, you keep looking.

But if my research is exhaustive, and the evidence is contrary to my gut, "opinion"...then it is time to revise my opinion.

For me, it would be just that simple.

But I am sure someone here can find a way to make that sound stupid.

 

[stefan olafson]

That is why there are three approaches to value and many sub-approaches within those three. If you complete the sales comparison approach correctly and the value doesn't look or feel right, do the cost approach correctly to validate the value or to give you another indication of value. If possible, not often on residential single family appraisals, do the income approach. Then you have three values which should be within a close range, if they are not, then something went haywire somewhere.

You as an appraiser are given the responsibility to give a well reasoned supportable opinion of value. Does personal opinion enter the equation? Most certainly when done appropriately....

 

[Terrel L. Shields]

You should always state what the market tells you, and always state a professional opinion, not a personal opinion, IMO

it is difficult to seperate personal from professional opinion. And there is no such thing as unbiased. The bias of unbias is a bias. If my comps are fishy, I might be left seeking support elsewhere or further out. I have rejected comparables simply because they appear too high or low. Market data is not a pure rational market. The fungibility issue (liquidity) and uniqueness of every house makes it quiet possible to have an arm's length transaction which is atypical in price.

 

[Fred]

The short of it is that market value will be what the data indicate. Unless you have a data shortage, in which case, you will have to substitute what you think ought to happen. Then again, I was told in a recent thread that "experience" should rule over data.

I don't know if it would help, Greenback, but I could steer you to some journal articles that refer to "positive" analysis as determining how it is, ie what the data indicate; and "normative" analysis as determining how it ought to be, the more "personal" opinion thing.

That is why there are three approaches to value and many sub-approaches within those three. If you complete the sales comparison approach correctly and the value doesn't look or feel right, do the cost approach correctly to validate the value or to give you another indication of value.

I disagree. The sales are much more likely to tell you what something should sell for, without imposing any person beliefs. The CA is more likely to be a personal opinion. Of course, with enough backing in, you can force the cost approach to do anything.

it is difficult to seperate personal from professional opinion. And there is no such thing as unbiased.

In the recent thread about price vs price per sf as units of comaparison, could you check the sample I posted and show me at what point I was "biased."

PS Terry,
Re our other discussion, I think Mr. Olafson is a good example of an appraiser who ran into trouble because of a cost approach, trouble he possibly could have avoided if he didn't develop it.

 

[Mike Boyd]

I would re-examine my adjustments, re-examine the data available in the comparable listing print-outs, do more paired sales analysis for any major adjustments and place two or more ACTIVE listings in the grid as additional comps. If the listings are telling you something different than your final analysis of value then maybe larger (or smaller) date of sale adjustments are needed.

Make sure to interview the agents involved with all comps. Ask about condition and any functional problems. It is possible that one or more of the sellers were super-motivated because of job loss, pending foreclosure or other outside factors, maybe there was an undisclosed incentive that the agent was not able to accurately describe.

 

[Metamorphic]

Comparable sales approach - Example (in the form of a question): You are appraising a residential property, you start extracting (paired sales) - etc.., then you reconciliate, come up with an opinion of value; you start thinking to yourself, this property shouldn't appraise for that much or vice versa.

Now, would you go by your personal opinion that this property shouldn't appraise for the value indicated after you properly extracted, reconciliated etc.., ORRRR, would you go by your opinion of what the market is saying?

Do you think there is a difference between a personal opinion of the market value and an opinion of what the market is saying?

I'm done, I'm ready for opinions, facts, and additional explanations...

What you're talking about is in essence "appeal" or perhaps functional utility. The metrics of the home suggest a greater value than the resulting product actually delivers.
IIWY I'd look for something missing in your assumptions and characterization of the squishy adjustments (view, location, condition, quality), and baring any mis adjustments on that account, I'd start trying to articulate a functional utility adjustment to square the data with your professional opinion.

 

[Greenback]

...I don't know if it would help, Greenback, but I could steer you to some journal articles that refer to "positive" analysis as determining how it is, ie what the data indicate; and "normative" analysis as determining how it ought to be, the more "personal" opinion thing.

Yes, please

When I read your post/reply, I automatically thought of patterns and trends, then exposure time...

I would appreciate it very much so if you directed me to some journal articles that you recommend.

Thank you...