August 5, 2013 – Post No. 24 – Badly paraphrasing a famous Christmas quote – Yes, America, things do happen in DC.
First, The Appraisal Standards Board (ASB) issued a new USPAP Q&A. This document can be obtained at the following link:
Three issues are discussed:
Utilizing a Data Entry Service
Shelf-Life of an Appraisal or Appraisal Report
Templates or Forms Used in Appraisal Review Assignments and USPAP Compliance
Also, this past week, the second International Conference on Collateral Risk was held in Washington, DC. The Conference was sponsored by the Collateral Risk Network, Robinson College of Business at Georgia State University, and the American Enterprise Institute.
The agenda with links to all presentations is available at the following link:
I encourage you to visit the website and view the presentations. There is some fascinating information presented.
I applaud the Conference and its presenters for delving into my favorite topic – price versus value. It is my opinion, that no appraisals of market value have been performed in the USA in the past 80+ years. We are good at providing Market Price, but very few appraisers truly know how to estimate (excuse me, ‘opine’ per USPAP) Market Value.
I have to correct my prior statement – I do know of one appraiser who has actually provided Market Value in an appraisal when Market Price was outlandishly disconnected with reality – one of my co-authors from a few years back, Stephen Fanning, CRE. From what I have heard and read about the infamous Dr. Graaskamp, I think he knew the difference and provided Market Value, also. Beyond those individuals, I know of no appraisers in the USA who have provided Market Value.
For us to break our cycle of simply following prices up and down, we must change our definition of Market Value. It is illogical for a definition to start out like this – Market Value is the most probable price… Value, price, and cost are three different concepts. Using the term ‘price’ in a definition of value is like defining an Orange as ‘An apple that….’ Our definition of market value is in desperate need of being updated.
I’ll end my rant for the week. Oh, I almost forgot – JP Morgan Chase agreed to pay a $410 Million fine last week. A law should be passed that such fines should be taken out of the CEO’s paycheck:) Maybe then all of the illegal activities that occur at companies would not occur. A Payroll Deduction Plan is long overdue.
Happy National Mustard Day,
George R. Mann, CRE, FRICS, MAI
Collateral Evaluation Services, LLC