Price Versus Value ? Define Value.

[alebrewer]

Value is Purely subjective

disagree that value is subjective. Agree that the more heterogeneous the market, the more challenging to nail down value. Think of value as the 'market clearing price' if that helps. It's the price where all available goods for sale are 'cleared'. At prices above market value, product doesn't sell. At prices below market value, there isn't enough product. Take gold for example. The SD for spot price of gold is pretty small - that's because the gold market is an efficient market - lots of sellers, lots of buyers, no asymmetry of information, homogenous products, low barriers to entry. SD for a home, however, is typically not very tight (unless you have an extremely homogeneous market (high rise condos for example).

 

[glenn walker]

I hope you quit appraising before the fog set in -

Value is subjective, fine. Everyone can pay what they want and think what they want wrt whether they got a good deal or not. Of course, market participants pay a price. Doh. There is of course a correlation between price and value.

Again, the appraisal is nothing more than a value model developed per a methodology and using a value definition, for the use by a client and a limited set of users. For a stated use a lending decision, a listing price , dividing divorce proceeds, etc. Anyone else can value the property however they like.

We never let a form control our value or price opinions. NAR set the best definition 75 years ago and it's ( Price Opinion ) that's what and how we always rolled. Fannie Certification is misleading but that's okay.

 

[NC Appraising]

Fair Market Price. The most probable price, as of the date of inspection or
other specifically defined date, in terms equivalent to cash, unaffected by
special or creative financing or sales concessions, for which the property
should sell after reasonable exposure in a competitive market under all
conditions requisite to a fair sale with buyer and seller each acting prudently
and for self-interest and assuming neither is under undue duress. Also known
as Market Price.

https://nabpop.org/wp-content/uploads/2017/11/BPOSG-V5.pdf

The difference between these reports relies on the statues that regulate them. A BPO/CMA by its
statutory terms is a report detailing the “probable selling price or leasing price” of property. Whereas
Evaluations and appraisals are defined as valuation reports.
In everyday life the terms price and value are used interchangeably, however, since these terms are
used in statutes regulating two distinct professions the exclusive use of these terms in separate, but
related chapters of law mean they take on distinct meanings. It is improper for a BPO/CMA to use the
term value when speaking on the probable price of a parcel of real property.

https://dlr.sd.gov/realestate/publications/bpo_cma_eval_app_distinctions.pdf

 

[glenn walker]

The most probable point of price=

 

[NC Appraising]

The most probable point of price=

I think the differences could have came about due to realtors not being allowed to do appraisals (an opinion of value) for a fee.

Agents give a price

Appraisers give a value.

 

[glenn walker]

I think the differences could have came about due to realtors not being allowed to do appraisals (an opinion of value) for a fee.

Agents give a price

Appraisers give a value.

Bingo both are the same but the Fed's after the Savings & Loan meltdowns needed a way to differentiate an Appraisal from a BPO or Realtors CMA.

If you use value it's legally an appraisal which Carrie's legal liability. NAR lawyers helped define the BPO or the CMA to not be held to the same legal standard of liability. Kinda like Physically Observed is less liability than Physically Inspected in legal proceedings.

The Fed's for FRT purposes high fived NAR attorneys and created the definition of value so appraisers could be held liable and Realtors just a price opinion. The fact is there is no difference in how I arrive at my final price or value, but value makes me liable and attach it to Upap and I'm now owned by any party that doesn't like my opinion of value.

 

[J Grant]

The most probable point of price=

The MV definition is not merely the most probable point of price. The MV definition of market value consists of the entire paragraph, which spells out the terms of sale, market exposure and motivations of the parties as a set of parameters for the most probable price.

Of course, the definition of MV is not the same thing as the opinion of market value. The opinion of MV is the appraisal. The definition of MV is the type of value sought in the appraisal)

 

[NC Appraising]

It really does not matter. In 20 years, USPAP will have..
.
Appraiser: a extinct species

Value: a numerical amount a avm provides. See also waiver.

Lol.

 

[glenn walker]

It really does not matter. In 20 years, USPAP will have..
.
Appraiser: a extinct species

Value: a numerical amount a avm provides. See also waiver.

Lol.

Correct it doesn't matter anyways the definition of value has been changed before and nobody cared and in fact 90% never even knew it. The same with Firrea it's never left but rarely do you hear appraisers talk about it.

 

[Surf Cat]

The most probable point of price=

The price on the contract