The definition of Market Value we use includes an implicit HC

[glenn walker]

Value equals what a buyer will pay. Price= Value= Value = Price

 

[Mike Ault]

Value equals what a buyer will pay. Price= Value= Value = Price

Value equals "the most probable price…".

 

[J Grant]

Hi Glenn ! Nice to see you back!

 

[J Grant]

Value equals "the most probable price…".

The definition of market value states it as the most probable price at the terms and motivations described in the definition.

Our opinion of market value is the appraisal, which uses a MV definition for the type of value sought.

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 report is
$ , as of , which is as of the effective date.

( as defined, references the market value definition used in the appraisal.)

ADVICE FROM THE ASB ON THE ISSUE:Relevant USPAP & Advisory References• The DEFINITIONS in USPAP include the following: APPRAISAL: (noun) the act or process of developing anopinion of value; an opinion of value.• Also included in the DEFINITIONS is the f

 

[RCA]

The "sale" mentioned in the definition of "Market Value." Is considered to be a hypothetical sale -- OF COURSE.

 

[Tom4value]

For entertainment purposes only.

View attachment 87087


We were (usually) there that day and as of that date we know that no sale was consummated and that title was not passed from seller to buyer. We also know that even if there is a sales contract some of those transactions never do result in the title being passed from seller to buyer.

Moreover, the specifics about buyer and seller, motivations, exposure, etc are referenced in that sentence as "conditions". Not assumptions. Although not explicitly phrased as if/then hypotheticals that's effectively how they function and relate to the application of this definition of value.

Maybe it's just me, but I never thought about the mechanics of this application in these terms before. Your thoughts/opinions?

I am an appraiser and a home brewer (I brew my own beer). Our credo for home brewing is, “ relax, don’t worry. Have a home brew!”.

Same thing with appraising. We are not scientists or mathematicians. We do not deal in exact data (though some of us think that). We deal in estimation of people’s motives. It is not an exact science. It is all about estimation with moving data and buyers who are not as educated about the market as us. It is not “2+2=4”. It is, “2+2 might equal 4, might equal 5 or 3, depending on the day…a day that can and does change”.

Just like home brewing, do your best with the skills you have. At the end of the day, “relax. Don’t worry. Have an appraisal!”

 

[sputnam]

Value equals what a buyer will pay. Price= Value= Value = Price

That's the value to a particular buyer... not market value.

 

[J Grant]

That's the value to a particular buyer... not parket value.

I think you meant to write a market value, but parket value works for a garage appraisal!

USPAP & Advisory References•: APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value.•

What you state is true; an individual price may represent MV to that buyer and seller, but it is not an opinion of MV in appraisal. And that price may or may not have been arrived at with MV terms of sale

A problem arises when appraisers take the stand-alone term "market value" ( the definition of market value) and treat it as the same thing as an opinion of market value. They are not one and the same. An MV definition states the terms of sale and the motivation of parties for that type of value. The opinion of market value is the appraisal, which uses the definition of MV to filter the HC/assumed "sale" of the subject as well as to vet the sale terms of the comps.

 

[Tom D]

interesting conversation, but i love the dumb phased out look on the lender & underwriter's face about quantum appraisal physics. maybe a value range is a better definition of market value. or how about an avm as market value, which way does that go in this definition. sorry, i got lost halfway reading the 1st post.

 

[RCA]

The first post doesn't make any sense, taken literally. Talking about the probability of an event implies that the event never occurred, i.e. that is hypothetical. So, of course the definition of Market Value provided is not precise English - but it is indeed the way some people loosely attach conditions to a hypothetical event. Germans wouldn't say it like this. They would say:

"Der geschätzte Betrag, zu dem ein Vermögenswert oder eine Immobilie zwischen einem willigen Käufer und einem willigen Verkäufer in einem offenen und wettbewerbsfähigen Markt gehandelt würde, wobei beide Parteien sachkundig und in ihrem besten Interesse handeln und ohne Zwang kaufen oder verkaufen. Das Geschäft wird zu einem bestimmten Datum unter üblichen Marktbedingungen abgeschlossen."

This translates to:

"The estimated amount at which an asset or property would exchange between a willing buyer and a willing seller in an open and competitive market, where both parties act knowledgeably and in their best interest without compulsion to buy or sell. The transaction will be completed on a specific date under usual market conditions."