[uim-commit] NUMBER ONE Success System

[Tommy Lee]

http://www.noss123.com/


In the US, appraisals are performed to a certain standard of value (e.g. --
foreclosure value, fair market value, distressed sale value, investment
value). The most commonly used definition of value is Market Value. While
USPAP does not define Market Value, it provides general guidance for how
Market Value should be defined:
*...a type of value, stated as an opinion, that presumes the transfer of a
property (i.e., a right of ownership or a bundle of such rights), as of a
certain date, under specific conditions set forth in the definition of the
term identified by the appraiser as applicable in an appraisal.*

Thus, the definition of value used in an appraisal analysis and report is a
set of assumptions about the market in which the subject property may
transact. It becomes the basis for selecting comparable data for use in the
analysis. These assumptions will vary from definition to definition but
generally fall into three categories:

   1. The relationship, knowledge, and motivation of the parties (i.e.,
   seller and buyer);
   2. The terms of sale (e.g., cash, cash equivalent, or other terms);
   and
   3. The conditions of sale (e.g., exposure in a competitive market for
   a reasonable time prior to sale).

In the US, the most common definition of Market Value is the one promulgated
for use in Federally regulated residential mortgage financing:
*The most probable price which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably and assuming the price is not
affected by undue stimulus. Implicit in this definition is the consummation
of a sale as of a specified date and the passing of title from seller to
buyer under conditions whereby: (1) buyer and seller are typically
motivated; (2) both parties are well informed or well advised, and each
acting in what he or she considers his or her own best interest; (3) a
reasonable time is allowed for exposure in the open market; (4) payment is
made in terms of cash in U. S. dollars or in terms of financial arrangements
comparable thereto; and (5) the price represents the normal consideration
for the property sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.*[3]
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