How Does The Appraiser Determine The "Opinion Of Value" Of An Asset When Using "Market Data?"

By Utilizing The Sales Comparison Approach

Definition

"A set of procedures in which an appraiser derives a value indication by comparing the personal property being appraised to similar assets that have been sold recently, applying appropriate units of comparison, and making adjustments based on the elements of comparison to the sale prices of the comparable."

The Process

The process begins by researching assets which have recently been sold or are offered for sale. These assets should have similar Make, Model, Age and similar options and specifications.

• If the make, model, and age, options and specifications of the comparable asset are equal to the subject asset, the appraiser focuses on specifications or "technical" differences between the subject asset and the comparables assets, adjusting the value based on the differences.
• Adjustments to value are made to the Comparable Asset, not the Asset being appraised.

Auction Sale Prices

The sale price is the Force Liquidation Value when an asset is sold under duress at publicly held auction, sold as-is, where-is with no warranty and all removal cost responsible to the buyer.

Asking Price

This represents the Fair Market Value "Potential" of the asset expressed in terms of cash or cash equivalent from a willing buyer and a willing seller. It is assumed that both the buyer and seller are acting at arm's length in an open and unrestricted market, neither the buyer nor seller is under compulsion to buy or sell, and both have reasonable knowledge of the relevant facts.

An Important Note

It is important to note that when using asking prices as a source for comparable sales, the appraiser should speak with the seller or dealer regarding discounts or special offers. It is also important to determine how long the Comparable Asset has been for sale.

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