• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Prediction Of Past Hypothetical Events

Status
Not open for further replies.

Bert Craytor

Thread Starter
Senior Member
Joined
Jun 27, 2017
Professional Status
Certified General Appraiser
State
California
There has been some consternation among appraisers that the term "predict" can only be applied to future events. This is not so. There is something called a "third conditional tense" in English, which allows a term such as "predict" to be used with respect to past hypothetical events.

http://grammar.ccc.commnet.edu/grammar/conditional2.htm
https://www.perfect-english-grammar.com/third-conditional.html
https://web2.uvcs.uvic.ca/elc/studyzone/410/grammar/3cond.htm

Example:
If an average buyer and seller in the subject market, subject to the constraints of Fannie Mae's definition of Market Value, were to transact the sale of the subject property as of the effective date of October 1, 2001, the supporting argument predicts that the property would most likely have sold for $1.5M.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
If an appraiser wants to make price prediction for a past hypothetical event effective date, then the appraiser needs to clearly state that as the purpose of the assignment.

"Assignment purpose:" To provide a price prediction as of the effective date"

Because there a fundamental difference between appraiser providing an opinion of market value as of the effective date, and providing a price transaction "prediction" (retrospective or contemporary for the as of effective date.) And that includes when the appraiser uses the same definition of market value ( fannie or other widely accepted definition of market value)
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
hypothetical simply amounts to a "what if"

What if the property hadn't burned down 10 years ago?
What if we remodel this property next year?
What if this property already existed in this specified form today?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Bert -Example:
If an average buyer and seller in the subject market, subject to the constraints of Fannie Mae's definition of Market Value, were to transact the sale of the subject property as of the effective date of October 1, 2001, the supporting argument predicts that the property would most likely have sold for $1.5M.


I don't want to "predict" the average buyer /seller would have ACTUALLY transacted for 1.5 mil as of the effective date. Even if they meet every MV definition term 100%, I still don't want to predict what THEY , parties out in the market would/should/will/most likey do .

I can "predict", aka support what the THE APPRAISAL's hypothetical parties $ pay/sell for- but that literally does not become a price opinion or price prediction.

Because in the SOW, developing the "sale " from the SC approach $ amount is ONE value indicator . along with consideration of cost and/or income approach indicators, along with appraiser's judgments /analysis of the qualities / defects of the subject property and market conditions for the reconciliation for a market value opinion
 
Last edited:

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The data in appraisals and feedback from interviews of relevant participants come from the market so the expectation that events (such as an actual sale at MV terms ) that takes place would have a reasonable relationship to appraisal opinion of value is baked in to the appraisal.- it is called support for the opinion of value.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The cost approach as of eff date is also a hypothetical event...was a crew out there actually building the subject on that date? No, of course not. It is a "model" of a build at same/equivalent materials and quality of subject to be used for evaluation purposes within the appraisal..

While the "average" builder or contractor would theoretically build subject for a similar amount as my cost approach $ amount, I sure as heck don't want to predict that! The CA replacement or reproduction of subject is a model for evaluation purposes as part of the SOW, just as the hypothetical" sale" of subject in the CA is.

Much of the appraisal is hypothetical even though it relies on and uses real data. Either you believe in the modeling as a credible way to develop an evaluation model, or you don't,
 
Last edited:

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
gheez bert. you got shot down in two threads about this topic already so you needed to start a 3rd? maybe by the 8th or 9th thread you will win...
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks