"They [mortgage bankers] tend to assume the opinion is as reliable as the market value opinion
," Guerry says.
IMPACT: The requirement to develop an opinion of exposure time for all valuations where it is a part of the value definition, not just market value opinions
, will have little impact on most practitioners.
A traditional point-in-time market value opinion
is not enough to help clients answer those questions, especially in markets like those in 2006 and 2009.
Therefore, a critical step in the development of a market value opinion is analysis of the market trends.
When necessary for credible assignment results in developing a market value opinion, an appraiser must:
An effective market value opinion
should be confirmed by a sale of the property, if offered at that price for a reasonable period.
However, because excess rent is a real property intangible, separately allocating the present value of excess rent is typically not necessary when providing market value opinions
of fee simple estates or leased fee interests.
My letter to the editor certainly does not suggest we should cease providing clients with traditional market value opinions
tied to current transactions.
In "You Can't Get the Value Right If You Get the Rights Wrong," Lennhoff examines the challenging problem of developing market value opinions
of the fee interest in custom-built commercial properties.
As Table 1 shows, USPAP presents one level of binding requirements applicable to all appraisal assignments, an additional level of requirements for market value opinions
, and via Statement 10, a third level of requirements applicable to federally related transactions (FRTs).