Straight from USPAP value, price, opinons

[Meandering]

When we state our opinion, it does not become " a fact " - the appraisal report once delivered is in the hands of a client or user or non intended user . And sadly, non intended users can sue too.

Appraisers get sued for any number of reasons including the buyer or RE agent are not happy with the value, or a material error was discovered etc. But we are not sued because our opinion of value is now a "fact".
That is one of the reasons I am posting on this topic, the understanding that appraisers deliver opinions of value , and not an opinion of price ( fact) protects appraisers.

Your opinion of value is used as "the price" to which contracts are written/negotiated, or rewritten if there is a contingency clause, and is the "price" to which the lending LTV is based, determining the max loan amount for that specific property. Just because it is your opinion, once you "report" it, either verbally, or in writing, it is the price everyone is bench marking from, including the IRS if your assignment is an estate for taxes.

Because your opinion is what the market should agree to pay (the price), once all the parameters of the value definition are met.


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[Ricky LaFleur]

I've only read a little of the numerous recent threads covering this, and even when searching some older subject content today of another topic, lo and behold there was J Grant making a case for this and sidetracking some other thread!... kidding @J Grant, you must stay awake at night dwelling over definitions lol

Because your opinion is what the market should agree to pay (the price), once all the parameters of the value definition are met.

I don't get what the argument is over here, but your last statement seems to summarize what an opinion of value represents, which is the market's opinion of value that is eventually reflected in a price.

An older MAI instructor who specialized in litigation told us in a class that an appraisal is an opinion of an opinion. It is the appraiser's opinion of the market's opinion. But it's stated in terms of the most probable price that the property would bring in the market.

What's the debate for?

 

[J Grant]

Your opinion of value is used as "the price" to which contracts are written/negotiated, or rewritten if there is a contingency clause, and is the "price" to which the lending LTV is based, determining the max loan amount for that specific property. Just because it is your opinion, once you "report" it, either verbally, or in writing, it is the price everyone is bench marking from, including the IRS if your assignment is an estate for taxes.

Because your opinion is what the market should agree to pay (the price), once all the parameters of the value definition are met.


.

I agree with your first sentence, that clients /others use an appraiser opinion of value ( the price part of it ) to benchmark from. Fine, that is their USE. But the appraisal PURPOSE was an opinion of market value . We can't let our client's use ( buy or sell at this price or lend on LTV% off this price ) change the appraisal's purpose. our purpose.

Because your opinion is what the market should agree to pay (the price), once all the parameters of the value definition are met.

Your second sentence, No. That makes an appraisal value opinion ( $200k) into an expected fact price of 200k- that the market, or an actual buyer should agree to pay that, once all the parameters of the value definition are met. This is the mistake I see leading people to say we make opinions of price/similar . The mistake is below:

Incorrect: order A market value definition terms of sale are met, = $ 200,000 price. Thus $200,000 is the market value opinion. That is backwards.

Correct : An appraisal is the appraiser's opinion of market value , as defined, of $200,000. That is how market value opinion is expressed on the URAR , the as defined is the market definition terms of sale for the type of value for the most probable price.

When appraisers think of it in the incorrect order, it is then easy for them to swap it around, A value opinion is a price, or a price is a value opinion etc. But that is not USPAP compliant.

 

[J Grant]

I've only read a little of the numerous recent threads covering this, and even when searching some older subject content today of another topic, lo and behold there was J Grant making a case for this and sidetracking some other thread!... kidding @J Grant, you must stay awake at night dwelling over definitions lol


I don't get what the argument is over here, but your last statement seems to summarize what an opinion of value represents, which is the market's opinion of value that is eventually reflected in a price.

An older MAI instructor who specialized in litigation told us in a class that an appraisal is an opinion of an opinion. It is the appraiser's opinion of the market's opinion. But it's stated in terms of the most probable price that the property would bring in the market.

What's the debate for?

Thanks for the compliment! But I actually am not as concerned with the definitions as the mis use of them I see posted,, not just because of semantics, but because it leads to incorrect thinking about the purpose of an appraisal is a price., and then that leads to rubber stamping since well doh if buyer A and B agree on a price and it meets the definition of market value it is the opinion of value etc. That is not my personal opinion, I made this post focusing on USPAP which explicitly says it in their definitions .

WRT to the MAI instructor - it's interesting ! I am not sure I agree with it 100% but don't want to derail the thread -(or too tired to think it through and it's just Moncay! )

 

[Bob Ipock]

The BPO used by real estate broker clearly states it NOT an appraisal. The NCAB (and I bet many state boards) have rules that clearly say a BPO is not an appraisal and must not be described as such and in fact must have the disclaimer.

 

[J Grant]

The BPO used by real estate broker clearly states it NOT an appraisal. The NCAB (and I bet many state boards) have rules that clearly say a BPO is not an appraisal and must not be described as such and in fact must have the disclaimer.

That is correct.
Given that USPAP says what it says ( first post on this thread ). why are peeps STILL saying appraisers give a price opinion or an opinion of price ? ( or a market value opinion is a price opinion etc

 

[Dublin ohio]

It seems to me that USPAP is adhering to the "legal" definition of "price". Which is what we should really be concerned about. Because the only time the difference would be important would be in a legal sense. Such as a claim by homeowner that your appraised "value" did not reflect the "price" I actually sold it for. Price is an absolute. Value opinion is a "probability".

 

[glenn walker]

That is correct.
Given that USPAP says what it says ( first post on this thread ). why are peeps STILL saying appraisers give a price opinion or an opinion of price ? ( or a market value opinion is a price opinion etc

Unlike cost and price which are facts, "value is an opinion, albeit an opinion with a basis in fact"
i.e., value is always justified since it is determined by reference to factual market data such as
past consummated sales or bona fide asking prices for comparable properties.

The Point Is : The appraisers price opinion of value when converted to a final $$ amount of market value then becomes more than just an-opinion. When the Lender-Buyer take that Opinion of Value it now converts to a Price. Again we are just playing Semantics but unlike an ordinary opinion which is assumed to be just that with no data or basis of fact is even required.

 

[J Grant]

It seems to me that USPAP is adhering to the "legal" definition of "price". Which is what we should really be concerned about. Because the only time the difference would be important would be in a legal sense. Such as a claim by homeowner that your appraised "value" did not reflect the "price" I actually sold it for. Price is an absolute. Value opinion is a "probability".

And we have to adhere to USPAP...


Sine appraisals are under USPAP, to see appraisers saying we give price opinions, or an opinion of value is an opinion of price/ they are the same thing etc....incredible -they don't seem to understand it is not just semantics, this goes to the heart of what an appraisal is ( and what an appraisal is not )...and can affect appraisal practice.

 

[KONA]

JG's got it right! Price, is the result; MV is opinion/judgement of what the overall market thinks of the price.