AI and Appraisal Success, Cindy Chance Terminated (Appraisal Institute CEO)
September 20, 2024
What’s in This Newsletter (In Order, Scroll Down)
- Using Trainees, the Safe Way
- Appraised Value Vs. Sale Price
- Converted $500K Minnesota Bank With Historic Vaults and Bulletproof Glass
- How AI Tech is Reshaping Appraisal Success
- From Panic to Profit: One Appraiser’s Story of Survival and Growth
- Cindy Chance Terminated (Appraisal Institute CEO)
- Mortgage applications increased 14.2 percent from one week earlier
Appraised Value Vs. Sale Price
Excerpts: Property sellers often ask professionals who are performing appraisals for mortgage lending, “Why is an appraisal even needed? The buyer and I have already agreed on a sale price.” However, when it comes to appraised value vs. sale price, they are not the same thing.
What is Value?
Value is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) as:
“The monetary relationship between properties and those who buy, sell, or use those properties, expressed as an opinion of the worth of a property at a given time.
Comment: In appraisal practice, value will always be qualified—for example, market value, liquidation value, or investment value.”
What is Sale Price?
Unlike value, price is not an opinion. It is a fact. Price is defined in USPAP as:
“The amount asked, offered, or paid for a property.
Comment: Once stated, price is a fact, whether it is publicly disclosed or retained in private. Because of the financial capabilities, motivations, or special interests of a given buyer or seller, the price paid for a property may or may not have any relation to the value that might be ascribed to the property by others.”
What’s the Difference Between Sale Price and Appraised Value?…
If a property is under contract for purchase at $450,000 and an appraiser provides a market value appraisal of $425,000 for the property, the $450,000 sale price is a fact, while the $425,000 appraised value is the appraiser’s opinion. The $450,000 price is what the property is actually selling for. The $425,000 market value opinion is what the property should sell for, under the specific conditions of the definition of market value.
The Appraiser’s Role
Properties don’t always sell for what they should. Depending on many factors, including the motivations and negotiating skills of the parties involved, a property might sell for more than its value, less than its value, or right at its value.
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My comments: Short and worth reading. Good analysis – for newer and more experienced appraisers.
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