USPAP Standard Rule 2-1

[App601]

I would like to know the opinion of my fellow appraisers about statements like these

"The DSCA reflects an opinion of value of $zzz derived by the weighted average method"
"The DSCA shows a range of value from $100,000 to $160,000 with a value indication of $121,000.

My opinion is that statements like there are a violation of USPAP standard rule 2-1 b as they are misleading

I seldom use the weighted average method. But when I have had to use it I make a statement like this

"The weighted average method was used as follows 50% weight was given to comparable sale number 1 which is from the same development and 25% weight was given to comparable sales number 2 and 3. This gave an amount of $ zzz,zzz rounded to $yyy,yyy"

In the second phrase I normally say that the opinion of value was based on Comparable x the most similar or the most recent or the nearest to subject.

The opinion of value that I use 99.9% of my appraisals is based on ONE value on ONE comparable sale. THe exact amount of that comparable sale

Am I right? Or are statements like these are not considered misleading?

 

[hastalavista]

If $121k is the weighted average and identifying it as such is accurate, it isn't misleading, is it?

I think you are asking about explaining the methodology of the reconciliation.

The weighted average would assign most "weight" to the comparables with the least amount of adjustments.
The implication is that the comps with the fewest adjustments are most similar to the subject and therefore should be considered ("weighted") on that basis.

I personally would not just say my value is based on the weighted average because sometimes the adjustments do not capture the full dynamic of the problem. And, I don't like to say "average" because that implies a rote calculation rather than me sitting and thinking about my final value opinion (how I considered it).
I'd explain how the weighting works and why I think, for a specific assignment, it would be appropriate.

But describing it accurately for what it is, isn't misleading IMO.

 

[Howard Klahr]

The opinion of value that I use 99.9% of my appraisals is based on ONE value on ONE comparable sale. THe exact amount of that comparable sale

Then why do you even bother with any additional data?

 

[Elliott]

violation of USPAP standard rule 2-1 b

So I'm working on a report, in front of me. SCA has indications of $275, $328, $365, and $292.

I've given Sale No. 1 the most weight, along with Sale No. 4. Can you guess the value? I would think USPAP could give you the number.

 

[Joe Flacco]

It's tough to guess the value with only that.

 

[Joe Flacco]

I will take a guess and say $300k.

 

[Elliott]

Too high. Your guess would be a 2-1b violation. I'll let you report yourself.

 

[Joe Flacco]

 

[residentialguy]

Hopefully after your adjustments, your range is a bit more narrow than $100,000 to $160,000

 

[residentialguy]

If $121k is the weighted average and identifying it as such is accurate, it isn't misleading, is it?

I think you are asking about explaining the methodology of the reconciliation.

The weighted average would assign most "weight" to the comparables with the least amount of adjustments.
The implication is that the comps with the fewest adjustments are most similar to the subject and therefore should be considered ("weighted") on that basis.

I personally would not just say my value is based on the weighted average because sometimes the adjustments do not capture the full dynamic of the problem. And, I don't like to say "average" because that implies a rote calculation rather than me sitting and thinking about my final value opinion (how I considered it).
I'd explain how the weighting works and why I think, for a specific assignment, it would be appropriate.

But describing it accurately for what it is, isn't misleading IMO.

Yup....and to add to that, if the appraiser knows that it is not a good reflection of MV, that's when it becomes misleading.