Shane Lanham's court case re: a black couple suing him for bias, and him fighting back.

[Fernando]

Buyers can overpay, i.e. pay more than market value - or underpay- pay less than market value. That is to say, purchase price is not necessarily the same as market value.

A lot of appraisers lack the intelligence to know that a comparables net sale price is not necessarily its market value - even though it is used to estimate market value. A good appraiser should have a deep understanding of this concept. Very few do, they don’t REALLY understand it.

Therefore your protocol for SCA should provide a mechanism for exposing this difference. The only one I know of is RCA using MARS.

A lot of appraisers know readers don't know purchase price is not necessarily same as market value. Some will be higher some will be lower. Appraisers use what is best for their reports.

 

[shrubberyvaluation]

This isn’t saying much at all. Of course juries themselves can be so biased, that it is essentially impossible to get a fair trial. The judge, jury, attorneys and their supporting infrastructures can all be heavily biased and lack intelligence and competence. In fact one could also maintain that there is a general lack of confidence in appraisers by all - even the appraisers themselves.

So the so-called onus is on superficial evidence and name calling - because the best evidence appraisers can come up with may not be understandable by the jury or any one else.

The “onus” is on this so-called “appraisal system” we have to work with - that is an extremely shoddy product: USAP, GSE Regs, other Fed and State laws, and above all the shoddy methods taught by appraisal institutions - their so-called peer based protocols, such as the SCA.

It’s a logjam - such a gigantic mess - you don’t know where to start to fix it - and you are immediately put into such a state of disillusion you want to give up before you start.

DOJ has unlimited resources, appraisers do not. The case doesn't need to have validity to wear down the appraiser including financially.

 

[RCA]

DOJ has unlimited resources, appraisers do not. The case doesn't need to have validity to wear down the appraiser including financially.

You can't discount the stress this puts the appraiser under. Or anyone, for that matter.

 

[RCA]

A lot of appraisers know readers don't know purchase price is not necessarily same as market value. Some will be higher some will be lower. Appraisers use what is best for their reports.

I'd note that most residential appraisers will round to the purchase price if possible - to avoid being harassed by the client. Unwritten rules from the client. -- And many skip think that the purchase price is the "best evidence of market value." IF the appraiser has good evidence that the sale transaction meets the definition of market value (as he has defined it in his report), and he has determined that his expected sale price is also the purchase price, then that is likely correct. That rarely happens, of course. Sure, you can usually do some reasonable rounding in your reconciliation - to get to the purchase price. On the other hand, you sometimes know you can't conclude the purchase price. The real problem is the appraisers who stretch, squeeze, and otherwise manipulate subjective values and adjustments to conclude a market value equal to the purchase price in ways that are time-consuming and difficult to critique by reviewers.

 

[George Hatch]

The concept of "most probable price" in the market can be readily measured after the fact by what the market participants actually did as opposed to what some outside analysis concludes they should have done.

Appraisers are exposed to an unrelenting feedback loop which will prompt for model calibration.

 

[RCA]

The concept of "most probable price" in the market can be readily measured after the fact by what the market participants actually did as opposed to what some outside analysis concludes they should have done.

Well, there you go. That is absolutely incorrect. Certainly is also lacking in sufficient detail.

At the time the contract is signed, the "most probable price" is, in reality, what statisticians call the "expected sale price" - and it would be based on what market participants in the market area did prior to the actual sale transaction. That expected value would be your only objective evidence of "most probable price."

I will make a point here: It is taboo to consider any market sales transactions after the subject sales transaction. With MARS and similar techniques, we put a lot of effort into creating robust models to handle new transactions that have never been seen before. We do this through the partitioning of data sets and cross-validation. The model created, then, is generalized enough to allow it to do a satisfactory job of estimating the probable price for a property it has not yet seen.

So, to your original point, we should be able to see all relevant market sales transactions that go into estimating "the most probable price" before the contract is signed. Yes, they may not show up in the recorder's office until weeks later, and of course, some sales will be pending, and the contract price will be hidden for some time after closing. If the sales price for a transaction closing just before the subject's sales contract is signed, is hidden from view, then one might argue it should not be considered. However, note that when a buyer scours the market for a particular kind of property that suits his needs, he can often pick up this information informally through rejected offers or agent remarks. So, I would say if a comparable sales contract was signed before the subject sales contract date, then it should be used, as long as it is fairly similar to the subject or is something the model can adjust to.

 

[Fernando]

I'd note that most residential appraisers will round to the purchase price if possible - to avoid being harassed by the client. Unwritten rules from the client. -- And many skip think that the purchase price is the "best evidence of market value." IF the appraiser has good evidence that the sale transaction meets the definition of market value (as he has defined it in his report), and he has determined that his expected sale price is also the purchase price, then that is likely correct. That rarely happens, of course. Sure, you can usually do some reasonable rounding in your reconciliation - to get to the purchase price. On the other hand, you sometimes know you can't conclude the purchase price. The real problem is the appraisers who stretch, squeeze, and otherwise manipulate subjective values and adjustments to conclude a market value equal to the purchase price in ways that are time-consuming and difficult to critique by reviewers.

Which is why appraisers should use more than 3 comps. In my reports, I usually have 6 comps. After adjustments, I let the numbers fall and I make reconciliation which computers can't do at this time.

 

[J Grant]

The concept of "most probable price" in the market can be readily measured after the fact by what the market participants actually did as opposed to what some outside analysis concludes they should have done.

Appraisers are exposed to an unrelenting feedback loop which will prompt for model calibration.

The most probable price is the term used in the MV definition. The MV which the MV definition defiens is the most probable price subject to the set of motivaoitns and terms the MV defiton states

A price in th market mahy or may not have been arrived at with the same set of condition sad the MV terms define.

Tehre is no such thing as a most probable price in the market. The price is the price - it is what the parties paid for that property, at whatever terms and condoisn and finaicng they used.

The most probpable price for appraisals is in the MV defitnion and is what the eproperty SHOULD bring ( in the hypotehical model of the epapraisal)

Of ourrse appraisrs are keenly aware of the prices, listings, adn pendings in the market for similar properties or for the subject itself in a sale contract.

 

[J Grant]

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting
conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this

Above from the line the appraisal states their MV opinion on the URAR. The word most probable price does not appear there


An appraisal opinion of market value is, as stated, an opinion of MV. The definition of market value spells out the terms and conditions for the most probable price for the type of value sought in the appraisal. If it were liquidation value or disposition value instead, they each have a different set of terms for their respective most probable prices in their LV or DV definitions.

 

[J Grant]

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.

Should bring is not always the same numerical $ amount as a sale price or a price a property is in contract for.

Should bring is the MV opinion the appraisal derived tonight the steps of the appraisal using the MV cited ( in this case, MV per the definition above)