Regression for GLA Adjustment

[J Grant]

O' No regression for GLA adjustments has turned into another "Price V Value thread. God I almost can't take it LMAO

Then don't read it anymore - it is not price V value -it is (or should be) what is the probable price equivalence to MV ( as defined )- the two do not have to be at war with each other.

 

[George Hatch]

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming
the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and
the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both
parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a
reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms
of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

I have bolded some of the terms of sale for our model HC transaction in the SC approach where we are to use the above applied- a model HC buyer and seller in the MV definition.

Contrast that to some possible actual terms of sale in a real live name buyer actual SC price - concessions, the property did not have reasonable market exposure, a buyer or seller is not acting prudently, the price was affected by undue stimulus, a buyer or seller was not well advised etc - any of these could produce a different price or affect a price , which is why among other reasons, a SC price might not match our MV opinion.

And once again, if our OMV is below or above a SC price, we are not lecturing a buyer or seller or telling them what to pay or sell for. We are (typically) engaged by the lender/client, a buyer can pay under or over our OMV, My OMV was 200k, the SC price is 220k, where did I tell a buyer what to pay?? they are free to put down 20k more in cash.

I am sick of the harassment lobbed if we dare do our job and opine a MV using the MV definition a charge comes that we think we are "smarter than the market " , or incredibly, that we are
" playing god"-made in the past on the board..

If an appraiser does not want to opine MV than don't take MV opinion purpose assignments. If you want to guestimate or predict prices then seek out price assignments -oh wait, there aren't any for appraisals -since an appraisal is defined as an opinon of value.

Again and for the umpteenth time these references are to the group, not to any one of your comps. Or to the specifics of your subject transaction.

If 80% of the transactions are selling with an S/L ratio in excess of 100% then what is typical among that group? The 0% of what these buyers "should do" or the 80% of what they actually are doing?

Just wait until the market actually tanks and the trend is reversed (again): If 80% of the transactions are selling with an S/L ratio below 85% then what is typical among that group? The 0% of what these sellers "should do" or the 85% of what they actually are doing?

 

[glenn walker]

I don't believe in market values only prices- There either too low or too high but the buyer and seller are the best indicator and I am just a referee calling balls and strikes.

 

[George Hatch]

I apply my own independent judgment as to what the market "should be doing" given the information a well-informed/advised person "should be operating under". Not what it's getting talked into by a team of shysters colluding together to disguise the true nature of the investment.

So what do you use for comps, and how do you relate your value conclusions to those comps? Are you reconciling to somewhere within the range of adjusted values for what those comps are actually doing or to some other number based on "your judgement"?

 

[glenn walker]

The team of shysters out this way usually want-to buy low and sell high, but maybe its different in Texas and it requires a Texas touch

 

[George Hatch]

These discussions ALWAYS devolve to a criticism of the definitions of the terms we use somehow being in error. That they somehow don't mean what they should mean. Nobody in this thread has gotten there yet, but it's just a matter of time before that comes up.

 

[Mike Ault]

So what do you use for comps, and how do you relate your value conclusions to those comps? Are you reconciling to somewhere within the range of adjusted values for what those comps are actually doing or to some other number based on "your judgement"?

I don't get assignments with "built-in fraud" anymore. This is a small town, & everybody knows better. Those turn into "review opportunities" eventually, and that's where I'll earn my keep.

 

[glenn walker]

What was the conclusion on regression for GLA adjustments ?

 

[George Hatch]

I don't get assignments with "built-in fraud" anymore. This is a small town, & everybody knows better. Those turn into "review opportunities" eventually, and that's where I'll earn my keep.

But you get my point, right? Yes, the market psychology can and sometimes does get out of line with the previous trends, but in any case the current trend IS the current trend whether we think they should be operating that way or not.

 

[glenn walker]

This is how Greg Boyd AKA CA Native RIP used to adjust GLA.

Isolate the feature, bracket it, then apply sensitivity analysis (play with the adjustments) until the high and low start going in the wrong direction.