LJ;450917 wrote: I am guessing that at some point during the next 20 years, there will be a major push to have real estate valued as an average of open market bids, not based off of sale comps and underlying "value".

I disagree 100%. That will never happen.

LJ;451819 wrote:Yes it does affect the WHOLE market. Because the bank's balance sheet is where the definition comes from. Bank Owned properties are not just on balance sheets, the LTV on mortgages held by banks is on the balance sheet as well. The market value IS determined by appraisers, because all they are doing is reporting the market PRICES combined into an average to determine market value.

No were ARE NOT averaging all the market prices combined - where on earth did you get that?


Bank balance sheets do not determine market value. That's absurd. Market value is present when banks aren't even involved in the transaction. Does a house purchased with cash not have a market value? Think about what you are saying.

Steel Valley Football;451825 wrote:No were ARE NOT averaging all the market prices combined - where on earth did you get that?


Banks balance sheet do not determine market value. That's absurd. Market value is present when banks aren't even involved in the transaction. Does a house purchased with cash not have a market value? Think about what you are saying.

THINK about where you came up with the drivel you just said that has nothing to do with what I said.
bank loans person $150k on a house that appraises at $185k and sold for $150k. The LTV is 81%. Turns out, that house would never ever bring $185k, the bank's balance sheet is off on their liquidity. It has nothing to do with bank owned or not. It has everything to do with the stated and the real value of the property.

Also, when there is never a bank involved, market value plays 0 role. That is where market price and fair value come into play. Your bank ordered 'market value" makes no difference. A house sold for cash only involves the buying and selling parties. "Market value" is a banking and accounting industry term and not a market term. It's a theory.

Market Value is not exact science, but an introduced concept from individuals and companies as a business tool

Like I said, it is a business theory.

LJ;451830 wrote:THINK about where you came up with the drivel you just said that has nothing to do with what I said.
bank loans person $150k on a house that appraises at $185k and sold for $150k. The LTV is 81%. Turns out, that house would never ever bring $185k, the bank's balance sheet is off on their liquidity. It has nothing to do with bank owned or not. It has everything to do with the stated and the real value of the property.

Also, when there is never a bank involved, market value plays 0 role. That is where market price and fair value come into play. Your bank ordered 'market value" makes no difference. A house sold for cash only involves the buying and selling parties. "Market value" is a banking and accounting industry term and not a market term. It's a theory.

Why did the bank loan 100% of the sale price? Sound like a bad business practice to me. Also sounds like a loan officer coerced a shady appraiser and sold the bank a bad loan.

RE: theory...does market value not exist in practice then since it's only a theory? Appraising houses is only a theory also. It's not a science.

Steel Valley Football;451849 wrote:Why did the bank loan 100% of the sale price? Sound like a bad business practice to me. Also sounds like a loan officer coerced a shady appraiser and sold the bank a bad loan.

RE: theory...does market value not exist in practice then since it's only a theory? Appraising houses is only a theory also. It's not a science.

Dodge the statement.

Also, where did I say it doesn't exist in practice? I said it is a business practice and WILL be governed by FASAB, whether you like it or not.

Steel Valley Football;451817 wrote:Market value is not determined by appraisers. Market value is determined by the market and REPORTED by appraisers. There's a big difference in those two statements.

....


Here's why I disagree that the FASAB's definition of market value is not what Con and I are debating. ...

???? I have debated no one.

After the market determines market value how do appraisers report it?

LJ;451852 wrote:Dodge the statement.

Also, where did I say it doesn't exist in practice? I said it is a business practice and WILL be governed by FASAB, whether you like it or not.

So a theory is being governed by the FASAB? Also, bet they don't do away with appraisers and start loaning based on average market bid or whatever mess you just said.

Steel Valley Football;451866 wrote:So a theory is being governed by the FASAB? Also, bet they don't do away with appraisers and start loaning based on average market bid or whatever mess you just said.

sigh. The use of a theory is governed by FASAB. It's obvious that you have the narrow view of an appraiser, which is fine, but you don't understand the overall workings of the economy and how accounting works. You see, your whole industry is based on accounting standards, not the other way around.

Con_Alma;451857 wrote:???? I have debated no one.

After the market determines market value how do appraisers report it?

By reconciling similar and substitutable property sales and reporting a probable value.

Thank you for answering a question of mine. It must be a selective process.

If a property does not have a substitutable equivalent what might it's market value be?? ...for example the undeveloped land I spoke of that's required by the local City's planning commission to be used for an additional development entrance for emergency services.

LJ;451869 wrote:sigh. The use of a theory is governed by FASAB. It's obvious that you have the narrow view of an appraiser, which is fine, but you don't understand the overall workings of the economy and how accounting works. You see, your whole industry is based on accounting standards, not the other way around.

Our whole industry arose because of fraudulent banking in the first place. Now the banks want to do away with appraisers so they can be frivolous again. The banking industry will need bailed out for a third time, mark my words. The taxpayers better start working harder to come up with the money for it. LOL.

Steel Valley Football;451876 wrote:Our whole industry arose because of fraudulent banking in the first place. Now the banks want to do away with appraisers so they can be frivolous again. The banking industry will need bailed out for a third time, mark my words. The taxpayers better start working harder to come up with the money for it. LOL.

ok? Once again, nothing to do with what I said.

Con_Alma;451874 wrote:Thank you for answering a question of mine. It must be a selective process.

If a property does not have a substitutable equivalent what might it's market value be?? For example the undeveloped land I spoke of that's required by the local City's planning commission to be used for an additional development entrance for emergency services.

Ah, a unique property. That's a great question. One that haunts appraisers at night while we should be sleeping.

We tell the bank "a market value can not be proven". The bank tells us "we have to loan, we must loan money; make up a value somehow". Bad appraisers say "yes sir". I say "pay me a trip fee...this assignment is over".

It's been my experience that most properties are unique in that they have a differentiating substance that entices the buyer to purchase over a another. Some simply have more than others.

How might an appraiser guess the market value of such a property as I described above knowing that's it's not a hypothetical but rather an existing scenario?

Would you state that a market value can't be determined?

LJ;451878 wrote:ok? Once again, nothing to do with what I said.

What did you say?

Con_Alma;451889 wrote:It's been my experience that most properties are unique in that they have a differentiating substance that entices the buyer to purchase over a another. Some simply have more than others.

How might an appraiser guess the market value of such a property as I described above knowing that's it's not a hypothetical but rather an existing scenario?

Would you state that a market value can't be determined?

Then you haven't seen enough properties. Most properties are built with the average home buyer in mind.

Your property has commercial value - I only do residential and small income producing properties.

I have stated that, but not like that because that's not a true statement. It just can't be determined by me. I say "this assignment is beyond the scope of my expertise". LOL.

Steel Valley Football;451938 wrote:What did you say?

I said that "Market Value" is merely a theoretical business tool that is governed by accounting standards.

LJ;451951 wrote:I said that "Market Value" is merely a theoretical business tool that is governed by accounting standards.

A theoretical definition based on how they can best describe how the real market works. The only way to change the definition is change the market. FASAB didn't write that definition either. The definition I've been posting, I mean.

Steel Valley Football;451947 wrote:
Your property has commercial value - I only do residential and small income producing properties.

I have stated that, but not like that because that's not a true statement. It just can't be determined by me. I say "this assignment is beyond the scope of my expertise". LOL.

Got it. I appreciate your candor...at least on this post.

I know it has value ...it may have commercial value to the developer but it has zero commercial value to me. In fact the value it has to me has nothing to do with marketing it for sale.

I have heard that everything has a price. I have no intentions in selling it because I have plans for it. They may still be a pipe dream but I have no interest or need to sell it. The developer thinks I'm trying to gain a higher offer.

I really don't care what his offer is. I don't need the money and I want the land.

Con_Alma;451978 wrote:Got it. I appreciate your candor...at least on this post.

I know it has value ...it may have commercial value to the developer but it has zero commercial value to me. In fact the value it has to me has nothing to do with marketing it for sale.

I have heard that everything has a price. I have no intentions in selling it because I have plans for it. They may still be a pipe dream but I have no interest or need to sell it. The developer thinks I'm trying to gain a higher offer.

I really don't care what his offer is. I don't need the money and I want the land.

The value to you individually is not market value, however.

Steel Valley Football;451971 wrote:A theoretical definition based on how they can best describe how the real market works. The only way to change the definition is change the market. FASAB didn't write that definition either. The definition I've been posting, I mean.

But the appraisal "market value" ISN'T how the market works. The market works off of market price and fair value. Market value is merely an accounting tool. Even the write up on wiki says this.

LJ;452051 wrote:But the appraisal "market value" ISN'T how the market works. The market works off of market price and fair value. Market value is merely an accounting tool. Even the write up on wiki says this.

Market value is the probable price the market will pay based on the five market conditions being met.

Market price and fair value are both borne from a single transaction. Single transactions are not a market value. They can be equal to market value but they do not necessarily dictate market value. Meaning, if you think of a standard bell curve, perfect market value would fall exactly in the middle (remember "market value" being an estimate) while market price and fair value COULD lie further away from the middle. This being because in estimating market value we seek to find the price that the average market buyer would pay.

A buyer can pay fair value and that fair value can be above market value. For example, a buyer may pay a premium of 30K for a house in Ohio because he really likes the in-ground pool. But, in-ground pools in Ohio, as you likely know, are usually an over improvement as the market does not support in contributory value what the pool cost to install because the average buyer in Ohio is not seeking an in-ground pool.

Con's in-law suite would be another similar example. The average buyer will not pay a premium for a house with an in-law suite, but a select buyer will pay that premium. What the select buyer pays would be the fair value, but that fair value is above what the market supports, i.e. the market value.

Where did everyone go? Con Alma?

I think it's pretty much settled - the definition of market value is not "whatever the transaction price is".

I'm here. Are you looking for something specific from me??

Wasn't this settled before this thread ever* started?

I don't think this thread impacted definitions or understandings at all. They remain the same from what I can tell.