Predominate Value (on form)

[VolcanoLvr]

On our beloved forms, there is a section on page one to ID the 'One Unit Housing' Low, High and Pred. (Predominate) values.

Can any of you find the precise definition of "Predominate Value" and quote the source of that definition? I don't want your 'opinion' of the definition....I want the actual citation we can use for that term.

I did not find anything about this in Fannie's Selling Guide.

The book "Using Residential Appraisal Report Forms" does not specifically mention this.

The book "The Appraisal of Real Estate, 13th Edition" does not mention this, at least from my initial search.

There is a belief among some reviewers that the Pred. Value must be the exact same value as the Opinion of Market Value. That's not necessarily so.

 

[Mike Kennedy]

Thanks to Tim Hicks - prior thread discussion August 2007

XI, 403.05: Price Range and Predominant Price (06/30/02)

Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser may state the predominant price as a single figure or as a range (if that is more appropriate). When the subject property has a sales price (or value) that exceeds the upper price range, the property is considered as an "over-improvement" for the neighborhood.

http://appraisersforum.com/showthread.php?t=125451

the source: http://www.appraisalcompliancereview.com/Downloads/Fannie Mae Appraisal Guidelines.pdf

 

[Sid Holderly]

predominate value

One rural or recreational properties (houses on lakes) you can throw out the extreme highs and lows and still have a $500,000 range. There are no areas with enough homes to be a statistically relevant neighborhood. You have to use the whole lake for lake front properties or whole county for rural properties to find enough comparables. On lakes fishing summer cottages will be side by side with several thousand square feet year round homes. A large range would work but the underwriters want a figure. We are just left with larger addenda explanations. The predominate value is somewhere near the mean and/or median. Your true comparables may or may not be near the predominate value as you may have an unusually small or large subject.

 

[NorthTexValuation]

There is a belief among some reviewers that the Pred. Value must be the exact same value as the Opinion of Market Value. That's not necessarily so.

Those reviewers are dumbasses that should be fired for stupidity and not even understanding what "predominant value" means.

There is ZERO relationship between predominant value and opinion of value. They are mutually exclusive.

 

[Tim The Enchanter]

Median price would seem a good stand in for predominant value.

Obviously not all properties in the 'hood will be at or even close to that figure. Well, most of the areas I work. Maybe not some that are really conforming, ie everything is more or less the same (boring).

 

[BOCK FOLKEN]

Just for another data point...I had an AMC Chief Appraiser tell me they wanted the current 3 month median value from the 1004MC reported as the predominant value on page 1. I almost always report this value as a range, but apparently some clients don't like that approach.

 

[Doctor Manhattan]

Appraisers and reviewers keep confusing the words Predominate and Predominant!! (where is TC when you need him, hasn't he already addressed this??)

“Predominate” is a verb: “In the royal throne room, the color red predominates.”

“Predominant” is an adjective: “The predominant view among the touts is that Fancy Dancer is the best bet in the third race.”

When discussing predominant value, please use the word "predominant" instead of "predominate". !

 

[Meandering]

Just for another data point...I had an AMC Chief Appraiser tell me they wanted the current 3 month median value from the 1004MC reported as the predominant value on page 1. I almost always report this value as a range, but apparently some clients don't like that approach.

So much for appraiser independence and no one is supposed to influence your report.

Let's see, were the AMCs supposed to be hired to PRESERVE appraiser independence and not to influence your report????

Where did the 3 month crap come from??

 

[NORTON]

Funny how price and value get thrown together for this portion of the form. Let's say u have a stand alone neighborhood that is comprised by large lakefront homes and smaller homes on interior parcels with the difference of their prices typically being greater than the price of the smaller homes. If during the prior year the same amount of large and small homes sell, what would the predominate value / price be? It seems no matter what response is provided, it's likely the subject would be considered either over or under improved.

 

[NORTON]

Thanks to Tim Hicks - prior thread discussion August 2007

XI, 403.05: Price Range and Predominant Price (06/30/02)

Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser may state the predominant price as a single figure or as a range (if that is more appropriate). When the subject property has a sales price (or value) that exceeds the upper price range, the property is considered as an "over-improvement" for the neighborhood.

http://appraisersforum.com/showthread.php?t=125451

the source: http://www.appraisalcompliancereview.com/Downloads/Fannie Mae Appraisal Guidelines.pdf

something changed from 2002 to 2005

XI, 403.04: Price Range and Predominant Price (11/01/05)
The appraiser must indicate the price range and predominant price of properties in the subject neighborhood. The price range must reflect high and low prevailing prices for residential properties that are comparable to the property being appraised (one‐family properties, two‐family to four‐family properties, condominium units, or cooperative units) and, in some cases, for competing properties (one‐family properties when the property being appraised is a two‐family to four‐family property or a condominium unit, or condominium units when the property being appraised is a cooperative unit). Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser may state the predominant price as a single figure or as a range (if that is more appropriate). When the subject property has a sales price (or value) that exceeds the upper price range, the property is considered as an “over‐improvement” for the neighborhood. The property is considered as an “under‐ improvement” if its sales price (or value) is less than the lower price range. If the subject property is an over‐improvement, the mortgage terms generally should be more conservative because the property may not be acceptable to typical purchasers. The appraiser must explain why the property is an over‐improvement or under‐improvement and comment on the adjustments that were made in the “sales comparison analysis” adjustment grid to reflect that condition.The lender should consider whether a property in an urban area is among those being renovated. Since demand for this type of property can be strong, the property should not be regarded as over‐improved if there is a strong market interest, which is indicated by the existence of comparable properties.