Are Appraised Values Guaranteed?

While appraiser's do their best to conclude market value opinions that are accurate they can offer no guarantee.  The problem with forming a market value opinion using appraisal methods is that even if you do everything "by the book," and the same as your peers, you can conclude a different value than they do.

So how does it happen that one appraiser comes up with a dissimilar result or different value opinion than that concluded by another appraiser? There are many reasons that dissimilar results can result from a similar assignment.  One appraiser may have a different somewhat subjective opinion about the condition of an improvements interior and exterior finish. 

Appraisers often select different comparable sales to use in their analyses.  I have seen few reports, even on the same property, in which the appraiser's used exactly the same sales.  It happens once in a while when a tract home is analyzed are there are limited sales, but it rarely happens in commercial assignments, and using different comparable can lead to some variability in results.

Even if the same comparable sales are selected many appraisers use different adjustments.  Sales adjustments are based on an individual appraiser's derivation of his or her adjustments and application of adjustments to the comparable sales for factors like; differences in location, improvement size, construction, changes in market conditions and effective age can account for final value opinion differences.

Some appraiser's talk about appraisals being both an art and a science because you cannot simply push a button and get a reliable commercial real property value result from an analytic model.  Clearly it's not just science. 

If you follow the automated valuation models (AVMs) that have been up for years online providing value estimates on single family residential (SFR) homes you may understand their limitations.  If you compare the model estimates on your home from the two most popular SFR models online you will have further evidence of estimate disparity.  You definitely can't get a guarantee from an AVM. 

Value opinions are just that they are opinions and not facts.  While most appraiser's will tell you that they are quite sure about the accuracy of their opinion, none will offer you a guarantee, and that's because they know that there is no way for them to prove that their opinion is the best or even any better than any other appraisers.

Opinions are opinions, so making them out to be facts is wrong.  Appraisal opinions like most are based on facts.  You know facts like; location, site size, building size, road frontage, building construction type and a number of other things often supplied by the Assessor or discovered when you inspect.  There is also factual information that relates to the comparable sales that are chosen.  If you discover that there are differences in these factual items between two appraisal reports then there may be a problem with one of the appraisals.

Once you get to adjustments and conclusions in an appraisal it becomes much more subjective and appraiser have a great deal of latitude or discretion to make adjustments for differences. 

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

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