Steel Valley Football;448669 wrote:How are you missing the big giant bolded definition of market value above???

...

How are you not reading the fact that I am not missing it but rather it is not the same definition as what I have accepted as the true market value?

Steel Valley Football;448669 wrote:...Regarding the other transaction prices. They were the market values at the point of sale but not before the points of sale. They then become historic market values and less and less relevant as time progresses.

I completely agree with this.

My point is that transaction prices according to your definition are not and were not ever true market value so why would they be used at all when creating a new appraisal....be they one day old or six months old?

Steel Valley Football;448662 wrote:You shouldn't accept the stated market drivers (as dictated by the market, not me...I was just trying to show some examples). Just know that you may pay more than market value if you (and when I say "you" I mean a buyer) ignore market drivers. By your definition, ANY price paid by you (any buyer) is the market value and that's simply not true. Think of the guy who paid a (pretty large) premium for his childhood home. Both the seller and the buyer met at a pricing point they both considered fair....but was that transaction the true market value?.

As for your other points here, again, this isn't about you specifically or anything specific transaction you have been involved in. I painted you as that type of buyer above because that's what you were describing; one who ignores accepted market drivers.

I was hoping you could answer the bolded question from my previous post if you have time today.

Because of the low rates, we considered refinancing. We had an appraisal done that appeared too low, so we had our house reappraised. Two appraisals done within a month of each other differed by approximately $75,000. We attempted to challenge the first (lower) appraisal, but we were told that we're basically stuck with it. The city appraised our property for tax purposes and came in line with the second appraisal. So we can't refi based on the low appraisal, but we have to pay taxes based on the high appraisal. Neither side is willing to budge, and we're stuck in the middle. Any ideas on what we could do? We pulled comps, wrote letters, demonstrated various flaws, but neither side was willing to listen. Any ideas?

fan_from_texas;449279 wrote:Because of the low rates, we considered refinancing. We had an appraisal done that appeared too low, so we had our house reappraised. Two appraisals done within a month of each other differed by approximately $75,000. We attempted to challenge the first (lower) appraisal, but we were told that we're basically stuck with it. The city appraised our property for tax purposes and came in line with the second appraisal. So we can't refi based on the low appraisal, but we have to pay taxes based on the high appraisal. Neither side is willing to budge, and we're stuck in the middle. Any ideas on what we could do? We pulled comps, wrote letters, demonstrated various flaws, but neither side was willing to listen. Any ideas?

FFT,

The two sides should not have access to each others' appraisal. Meaning, your property tax assessment should not affect your ability to refinance and vice versa as they are generated and owned by two separate entities.

However, the tax assessment the one you're going to have a harder time changing so my advice is to leave that alone. My company does many appraisals for tax purposes, but the appeal process is MUCH different in Ohio just based on a quick on-line scan of the Wisconsin appeal process.

The bank appraisal, on the other hand is only meaningful to the bank at which you attempted the refi. A new refi application at a different lender will get you a new appraisal. New federal rules now prohibit banks from ordering multiple appraisals on a property. This is due to the practice of lenders/originators in the past ordering and reordering appraisals until they got one with a high value. It's part of the new HVCC guidelines brought on by recent legislation. HVCC being Home Valuation Code of Conduct. That's likely why you're getting nowhere. On the surface, it could appear that lender was attempting to skirt the rules even though it may not have been a competent appraisal.

Con_Alma;449106 wrote:How are you not reading the fact that I am not missing it but rather it is not the same definition as what I have accepted as the true market value?

I don't mind you calling that market value definition "Steel Valley's definition" since I did post it here, but it's actually from Fannie Mae and the International Valuation Standards Committee, which has 41 countries as members. Basically, 41 countries have governments that adhere to that definition; the United States being one such country. International Association of Assessing Officers adheres to that definition also.

Con_Alma;449106 wrote:My point is that transaction prices according to your definition are not and were not ever true market value so why would they be used at all when creating a new appraisal....be they one day old or six months old?

No, that's (not) true according to my definition. The eventual transaction prices can be the same as the market value. But your definition does not allow for when transaction price doesn't equal the market value. Because, as you've stated it, the transaction price IS the true market value and you've allowed for no exceptions.

However, when you answer my question about the guy who overpaid for his childhood home, I think you will have trouble reconciling your statement with that scenario.

Con_Alma;449103 wrote:Yes, you missed something. You didn't call me a name nor did I ever say you did. You did called another poster an* idiot.

I apologize if I've offended you. It should be clear that I despise Manhattan Buckeye, but there was no need to label my distaste for him in this thread.

Con_Alma;449105 wrote:I appreciate your not being in the banking business so this isn'y necessarily directed for you to answer.

Would the requirement for the buyer to put down 20% increase the banks risk if the agreed upon sales price came in lower than Steelvalley's definition of market value??

If a bank has an 80% loan to value policy and the bank received an appraised market value of say $100K but the seller and buyer agree to a price of $90K hasn't the bank increased their risk, albeit by a small amount in this example?

This practice seems to lend to the fact that the bank is accepting the market price as the agreed upon selling price.

I think I remember a bank person telling me one time that they would lend 80% of the lower of the two values. So, if their appraiser came in higher than the sales price, the bank would be eager to loan as they would feel they had a lower risk, not higher. Logically speaking, that is.

Steel Valley Football;449445 wrote:I don't mind you calling that market value definition "Steel Valley's definition" since I did post it here, but it's actually from Fannie Mae and the International Valuation Standards Committee, which has 41 countries as member...

The term Steelvalley's definition was simply a shortened version of the definition you used as opposed to your own definition.

Steel Valley Football;449449 wrote:I apologize if I've offended you. It should be clear that I despise Manhattan Buckeye, but there was no need to label my distaste for him in this thread.

Lol. Gottcha but no need to apologize for I am not offended at all. It's pretty tough for me to feel offended from conversations on here.

It wasn't a need at all but rather a choice on my part to point out that name-calling doesn't truly reflect your intelligence on the subject matter at hand.

Steel Valley Football;449445 wrote:...

However, when you answer my question about the guy who overpaid for his childhood home, I think you will have trouble reconciling your statement with that scenario.

I have no idea what that question is. I'll have to go back and look.

"...Think of the guy who paid a (pretty large) premium for his childhood home. Both the seller and the buyer met at a pricing point they both considered fair....but was that transaction the true market value?...."

I think this is a hypothetical you have presented but to answer your question directly yes. I believe I have made that point clear several times which is your contention with my contribution in the thread.

My only contention with your question is the usage of the term "pretty large' premium. It may not be a premium at all if there is derived value from the amount that's equivalent to the dollars paid.

Con_Alma;449592 wrote:"...Think of the guy who paid a (pretty large) premium for his childhood home. Both the seller and the buyer met at a pricing point they both considered fair....but was that transaction the true market value?...."

I think this is a hypothetical you have presented but to answer your question directly yes. I believe I have made that point clear several times which is your contention with my contribution in the thread.

My only contention with your question is the usage of the term "pretty large' premium. It may not be a premium at all if there is derived value from the amount that's equivalent to the dollars paid.

But, is it a value that's recognized by the market or by that individual? In order to have value to the market there has to be similar and substitutable buyers who can also realize the same value by paying that premium. That's part of what defines a market - similar and substitutable buyers.

By the way, this was a real-life event.

While this thread is interesting, i thought you 2 should know that the actual meaning of "market value" for real estate is under scrutiny right now. The real estate that sits on banks balance sheets may or may not be accurate come time for liquidation. So basically FASAB is waffling over whether the value of real estate is an appraised value or what the actual property brings in in open market bidding.

I was mowing today and some guy drove by twice, then stopped on the road and came over to me while I was on the mower. (I can't get up or else it stalls.) He says something about appraising houses that have been sold/bought in the last year and that he needs to take a picture of my house. Just 1 picture. I look at his business card then back at him with his weird, half-up sunglasses, then back at his business card. I shrug, pause, then say "OK." I just thought it was weird. He was from Urichsville.

LJ;449694 wrote:...So basically FASAB is waffling over whether the value of real estate is an appraised value or what the actual property brings in in open market bidding.

I have confidence that they will see the light eventually.

Steel Valley Football;449604 wrote:But, is it a value that's recognized by the market or by that individual? ...

Both. The individual and the buyer are the market. You can't state that only the "individual" received value because two parties realized gain from the situation at the transaction.

In addition, when you are in the estimating/guessing world there's no way to truly know if another would derive value from the same or different reason. You can try and use numerous influencing predictors but in the end it's still a guess.

Haven't we already disagreed on point?

I'm going to end this once and for all with my next post. Con Alma you either have your terms mixed up or are just making up your own definition. I'll show you why a little later, but right now I have an 18 month old girl and a 3 month old bouncing baby boy that need my attention.



LJ,

That post of yours is very interesting and very important, but it doesn't apply to our discussion of market value as bank liquidation of real estate does not constitute an arms-length market transaction.

I've been talking with other appraisers about banks' asset sheets not matching their worth for at least 10 years when I realized how rampant appraiser and mortgage broker fraud was.

Steel Valley Football;450026 wrote:I'm going to end this once and for all with my next post. Con Alma you either have your terms mixed up or are just making up your own definition. I'll show you why a little later, but right now I have an 18 month old girl and a 3 month old bouncing baby boy that need my attention.

I've been clear all along that the opinions I offer are of my own and no one else. If you choose to term that as my definition so be it.

Have I given you any other impression that it was anything other than that?

Hug those kids. They grow up into teenagers in a blink of eye.

Steel Valley Football;450026 wrote:I'm going to end this once and for all with my next post.

Con Alma, the term you should be using is "fair value" and not "market value"


http://www.rhas.com.au/Content_Common/pg-market-value.seo


Market value is a concept distinct from market price, which is “the price at which one can transact”, while market value is “the true underlying value”. The concept is most commonly invoked in inefficient markets or disequilibrium situations where prevailing market prices are not reflective of true underlying market value. For market price to equal market value, the market must be informationally efficient and rational expectations must prevail.

Market value is also distinct from fair value in that fair value depends on the parties involved, while market value does not. For example, IVS currently notes market value "requires the assessment of the price that is fair between two specific parties taking into account the respective advantages or disadvantages that each will gain from the transaction. Although market value may meet these criteria, this is not necessarily always the case. Fair value is frequently used when undertaking due diligence in corporate transactions, where particular synergies between the two parties may mean that the price that is fair between them is higher than the price that might be obtainable in the wider market. In other words "special value" may be generated. market value requires this element of "special value" to be disregarded, but it forms part of the assessment of fair value.[2]

"...For market price to equal market value, the market must be informationally efficient and rational expectations must prevail.... market value "requires the assessment of the price that is fair between two specific parties taking into account the respective advantages or disadvantages that each will gain from the transaction. Although market value may meet these criteria, this is not necessarily always the case."

Nope I was referring to market value.

Con_Alma;450319 wrote:"...For market price to equal market value, the market must be informationally efficient and rational expectations must prevail.... market value "requires the assessment of the price that is fair between two specific parties taking into account the respective advantages or disadvantages that each will gain from the transaction. Although market value may meet these criteria, this is not necessarily always the case."

Nope I was referring to market value.

No, it's over and you lost.

Your definition doesn't account for when the market is NOT informationally efficient and when rational expectations DON'T prevail. Like with the guy who bought his childhood home.

Any ideas for the next topic?

I have a few....would you rather talk about the market destruction that occurs from illegal flip sales or from creative financing like with local Ohio builders M/I, Dominion, Homewood, etc?

Anyone can chime about those two ideas or another topic altogether.

I view the expectations as very rational and saw not inefficiency from an informational perspective. The expectations from both sides were rational in that the each received value for the price agreed.

It's a fair price between the two because there is an equivalent value derived by the transaction with consideration for the possible advantages and disadvantages that each will gain.

What's most interesting to me, however, is that you view this as a win lose scenario. In the beginning of the topic I think you stated that market value is not the price transacted at yet the above information states it can be. In addition, LJ has suggested that FASAB is currently debating the true definition giving credence to the fact that they not comfortable with a possible, presently accepted or practiced definition. At the very least they are doubting it.

Why did you ask me to come to this thread and discuss this with you? Was it in order to win?

Con_Alma;450412 wrote:I view the expectations as very rational and saw not inefficiency from an informational perspective. The expectations from both sides were rational in that the each received value for the price agreed.

It's a fair price between the two because there is an equivalent value derived by the transaction with consideration for the possible advantages and disadvantages that each will gain.

What's most interesting to me, however, is that you view this as a win lose scenario. In the beginning of the topic I think you stated that market value is not the price transacted at yet the above information states it can be. In addition, LJ has suggested that FASAB is currently debating the true definition giving credence to the fact that they not comfortable with a possible, presently accepted or practiced definition. At the very least they are doubting it.

Why did you ask me to come to this thread and discuss this with you? Was it in order to win?

Wow, do you really believe what you are saying or are you just trying to debate for the sake of debaing???

You are not being reasonable or logical. Any court, jury, or debate room audience would have sided with my definition of market value a long time ago. If you want to have another definition that you alone adhere to then that's fine, but millions of people use my definition daily. My argument has been proved beyond a reasonable doubt at this point.

I know you are not dumb so my only other logical deduction is that your being argumentative for the sake of being argumentative. Why explain any further?

I'm also a bit stunned you tried to use LJ's statement as support. Do you not realize that has nothing to do with our conversation? Your last two questions are irrelevant at this point. I mean, why would it matter...

I am not debating at all. Not arguing but rather participating as you requested and simply responding.

Yes, I do believe what I have posted.

My last two questions help me better understand the overall intent of your reasoning behind using the term "lose". That's where the relevance comes in .