PREDOMINANT PRICE VERSUS OPINION OF MARKET VALUE - The predominant price on page one is the MEDIAN of the value range for ALL residential properties within the subject neighborhood. By definition 50% of all homes in the subject neighborhood will be priced below the indicated predominant price and 50% of all homes will be priced above the indicated predominant price. The appraiser's opinion of market value is between the high and the low end of the price spectrum for homes in the subject neighborhood. The relationship between the indicated predominant price and the opinion of market value is not a recognized method of determining whether a property is an over improvement for the area. The predominant price is not related in any manner to the MEDIAN sale price for COMPARABLE properties.
Furthermore, the 1004mc is based on sales of homes similar to the subject based on size, age, and location. These sales have not been verified or adjusted for any amenities, sales concessions, or any other significant value related differences. Therefore, the MEDIAN sale prices of homes COMPARABLE to the subject is often not indicative of the appraiser's opinion of market value for the subject. Thus, these three numbers are not directly related to the appraiser's opinion of market value. Since the relationship of the neighborhood's predominant price to the appraiser's opinion of market value is not an indication of whether the subject is an over/under improvement, then if the appraiser deems the subject to actually be an over/under improvement adequate discussion will be made under such heading. Absent such a narrative, the reader should understand that the subject is not significantly larger/smaller than the surrounding homes to be considered an over/under improvement.
The subject's estimated value is above the predominate value in the subject's neighborhood because the predominate value represents the market as a whole and basically tells you the "mode" of the market values. The predominate value of the subject's neighborhood is based on a search of all sales within it's defined neighborhood, and the subject's value is a determined by a more specific search of properties that are narrowed based on size and features that are the most similar to the subject.