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Is My Appraisal Fact or Opinion?

by Administrator on Mar 20, 2012 General Appraisal 1511 Views

As every appraiser knows, appraisal reports display how an opinion or opinions of value were developed using accepted economic principals and appraisal methodologies.  While appraisers review facts that relate to the real property being appraised and facts about;  the market (supply and demand), facts about comparable sales, replacement cost facts and facts about rental rates, expenses, net operating income and capitalization rates, the end result of an appraisal report is an opinion of value and not a statement of fact.

Many appraisers who have been involved in litigation cases understand that differences, and at times large differences, can exist between one appraisal opinion and another.  I have seen situations where 5 appraisers will provide 5 very different opinions of value.  The point being that appraisers and their appraisal work products are not always consistent, some variability exists in their results.

Does that mean that appraisal reports are not reliable?  In my experience acting as a review appraiser I have found that disparate results are often the result of different assumptions, different dates of value or an appraisers access to
limited data sources.  Many appraisals can be reconciled if you understand what they did and why they did it.

Are appraisal opinions always right?  No.  Appraisers can make mistakes just like everyone else.  Like every other profession you will find appraisers who tend to provide value opinions that are slightly "high" and those who are
cautious and tend to offer value opinions that are slightly "low."  There is a range of values after the analysis, sometimes very narrow, and an appraiser has the discretion to reconcile a final value opinion within it, that's what makes it his r her opinion.

You will find that most appraisers try to do their analyses with little or no input from other people with their own opinions, they know how to analyze the data, collect the facts, talk to indiviudals active in the market and how to form their opinion, and if they have considered a reasonable amount of data, that doesn't mean every possible sale known and unknown, they will defend their opinion when they are finished and they often don't want to open their report to third-party suggestions. 

Others appraisers will always consider additional information and even amend their reports to make them "better," but this appears to others to be a way to change their previously formed opinion and they simply will not consider
additional information.

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