Prediction Of Past Hypothetical Events

[TRESinc]

Presumption is an opinion prior to actual knowledge. Sounds like a prediction to me.

ok, so i guess i should have posted i can presume you are not intelligent?

 

[J Grant]

A stock is purchased because the predicted present value of future benefits either meets or exceeds the price for which it can be purchased. A piece of real estate is purchased by an investor because the predicted present value of future benefits either meets or exceeds the price for which it can be purchased. Neither appraisers nor stock analysts control the actions of individual buyers and sellers, which is why there is a distinction between price and value. The stock analyst could be wrong, but so can we. To suggest that the step-by-step SOW of the appraisal model invalidates us from being wrong, yet a stock analyst very well could be is without merit.

A stock analysis, or an appraiser can be right or "wrong" . But its the intended use of the report they provide and whether it claims to be a predictive analysis or a present day opinion that matters to an investor for a stock or a buyer or lender for RE property.

The SOW of an appraisal can not indeed make the result foolproof, or come true, or "100% right" in the real world,. That is why it is an opinion based on a model, (the appraisal ), rather than a prediction.

USPAP says you are providing an opinion. So how can you instead provide a prediction and comply with USPAP? It's that simple.

 

[J Grant]

A stock is purchased because the predicted present value of future benefits either meets or exceeds the price for which it can be purchased. A piece of real estate is purchased by an investor because the predicted present value of future benefits either meets or exceeds the price for which it can be purchased. Neither appraisers nor stock analysts control the actions of individual buyers and sellers, which is why there is a distinction between price and value. The stock analyst could be wrong, but so can we. To suggest that the step-by-step SOW of the appraisal model invalidates us from being wrong, yet a stock analyst very well could be is without merit.

To clarify, the SOW of an appraisal does not guarantee we are "right". But the SOW of the appraisal should credibly support our result ( the opinion of value and other conclusions ) . It;s that simple. That;s all an appraisal is, aren't you happy about that?

That limitation of what an appraisal is, that it is an opinion based model ( not a prediction expected to perform ) is what protects appraisers. It is what prevents them from being dragged into court on a weekly basis. We are not expected to be "right" in the real world. ( though if we are good at what we do, real worlds events often show close results to our models/aka appraisals.). The expectation is the appraisal model we develop be credibly supported such that a user can rely on it to make decision.

Thus the appraisal is not supposed to be misleading or biased or poorly supported. It is supposed to present known facts and if a predictive analysis is used, explain and disclose what it is based on . That's it. That's the end. You want to be in the predictin business and be sued constantly because your prediction did not pan out? Why would you want that?

 

[J Grant]

People in the prediction business are not liable for their prediction, unless they commit fraud or other malfeasance. That;s why RE brokers/agents can prepare ridiculous CMA's or exaggerated rent projections and if the property's value tanks a year later agent shrugs and nothing happens. Same for a stock analyst or a meteorologist forecasting weather.

People in the prediction business are often also in the sales business, selling the very thing they "predict" Agents who prepare CMA's or rent projections sell the property on commission. The stock analyst recommends sell or buy on commission or salary with bonus. A meteorologist on TV "sells" an entertaining forecast to attract advertisers. Their protection is that buyers of the predictions can't successfully sue, because by its nature, a prediction can not be expected to come true all the time.

An appraiser is not "selling" anything, expect their own appraisal model ( an opinion). They are liable for their appraisal results. The fact that we are liable for our opinion means what we do carries a lot of responsibility.

Because of that, our product, the appraisal, has a baked in set of reasonable expectations/limitations, to protect us from people actually trying to use it as a prediction (unintended use or unintended user ) That is why USPAP is clear that we are providing an opinion.

 

[TRESinc]

it's really quite simple.

we offer an opinion of value. we do not offer a prediction of value. if we did there would not be an effective date, just a signature date.

 

[Mr Rex]

Why do some words scare folks so much?

 

[TRESinc]

Why do some words scare folks so much?

because words are powerful and have consequences when improperly used.

 

[Mr Rex]

Estimate! Bwah ha ha ha!

 

[J Grant]

I predict Mr Rex made a recent past silly post..OMG he did !