Ok heres my Question. I have always wondered how a higher value can be created when we bracket the sales price, GLA and the adjusted price of the comps. By bracketing we cant go over the highest close price or the hightest adjusted price. I know one of the reasons we bracket is to prevent super obsolecense, but im curious do any of you guys come up with values that are higher than the brackets will let you go.This my be a confusing ? . A good example of this is in a townhouse community. You have match pairs for comps 200,201,205 and they adjust out to the same 200,201,205 I whould give the property the value of 205 but since that is the highest sold comp how in the world can someone get 215. Ive seen it aton and i know there useing active or under contract as comp 4 & 5 but that is not an indication of the value just an anticipated value. Your thoughts on this is appreciated.

Lucidlid,

I never came across an assignment where this would be the case. But if I had an opinion of value outside the bracketed adjustments, I think proper disclosure of the scope of work and a complete, credible, economic, reasoning will be written up (atleast 4-6 pages long of explanation if can) supporting my opinion of value, for an extensive/comprehensive work file; not to mention a sincere disclosure of due diligence.

Then again, I would research (due diligence) and find sales that MAY be better (more credible) than the sales that were used as comparables. I would most likely make sure the sales used as comparables were the best available at the time of the effective date (due diligence). I MAY decline a type of an assignment that would make me want to express my professional opinion of value outside the market adjustments of what I had thought were the best available sales used for comparables as of the effective date of the Appraisal. I MAY feel it's in the best interest of my professional competence and economic health of the client, to do so; concluding with a referral to another Appraiser whom I may believe has the ability to reconciliate a credible/ethical, professional opinion of value.

Only thing that comes to mind would be the timing within the subject's market (sales used); if this "outside opinion of value" of the bracketed adjusted sales used were the case, and if there was a credible, economic reasoning for it, cycles come to mind; it will depend on a lot of disclosure and how knowledgeable the Appraiser is/was, not to mention the due diligence of the Appraiser? ...I think I would also consult with one of my peers for assistance if I were to go ahead and put my competence on the line. I would not want to mislead anyone with my opinion of value. A lot of decisions would have to be made, in my opinion.

Unless I knew what economically caused the value being outside an adjusted-market-derived, paired sale, bracket of the best known sales available at the time of the effective date of the Appraisal, then something may be wrong and, an ethical/credible disclosure will be my main concern for my work file. An unknown cause MAY have to be discussed through consultation if that is the case?

If the market data approach appears to be unreliable, maybe the cost approach will be a more credible indicator of market value, cosidering the size of the dwelling and the amount of depreciation?

However, after reading your post, inflated intentions MAY be the case. I remind you, I said, "MAY." I do not really know enough about your question NOR the Appraisal NOR the entire issue NOR the use of the Appraial. Also, I do not review Appraisals NOR am I an investigator, but I have my opinion of what I do understand from your comments/statements and wanted to comment. I thought your post was interesting and I were able to feel around a little bit about what you are questioning. The intention of my reply to your post is not to mislead anyone and hope you look at my reply as a sincere gesture in an attempt to understand your question/comments.

Lucidlid,

Maybe more clarification is in order? Even so, I thought it was interesting and I never came across any case or assignment, regarding what I believe to of have understood from your posting :)


Sincerely,
Benji

When the market is hot and the economic indicators are strong...then there is a case to go over your high sale but this can contribute to overinflated values. As a rule of thumb I would say to never go over or under your sales range...not that you can't but usually it will be a complex assignment and/or you're trying to hit a value for your client (big no-no).

You should always consider the economic factors and use that to help base your value. For example...in today's market I will usually stay at the lower end of the bracketing. The banks are very nervous and won't even look at anything over or at the high end whereas 2 years ago it was okay.

Also...the condition of your property can help you determine where your final value will be based on your sales range. If it's in average condition you can put it in the middle. Or in today's case...average condition in a declining market, I would put it close to the lower end but perhaps not at the lowest value.

Hope that helped.

Ed
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