Reference no: EM133150824

You are engaged to do an appraisal on a house with a most unpleasant history. The subject property was the site of a highly publicized, infamous crime scene. The house was built 35 years ago; the crime occurred six years later. The property sold one year after the incident for $185,600 to a family member. At the time, similar houses in the area sold between $225,000 to $260,000. Fifteen years later the house was listed for sale. It sat on the market for almost two years until it sold to the current owners for $300,000 - also family members. Similar homes at that time were selling in the range of $325,000 to $350,000. Today, after a further eleven years, current selling prices for similar homes are in the range of $450,000 to $485,000. The current owners are divorcing and the wife intends to buy out the husband's share. However, they cannot agree on a price. The counsel for each party has sought an appraisal. The appraiser for the wife is recommending a 30% market value reduction due to ongoing stigma from the crime event. You have been hired by the husband's counsel to prepare your own appraisal.

Answer the following questions:

(a) Discuss how this type of property impairment fits in the Bell Chart and outline its progression in the detrimental condition model. What is the typical or expected nature of the amount and timing of value loss?

(b) What is your opinion on the potential value loss due to stigma, both historically and currently? In providing your answer, state what further evidence you would seek out to support your answer (and state any assumptions you are relying on).

(c) Discuss your role as an expert in this scenario. What are your professional obligations under CUSPAP (or discuss alternative professional standards as appropriate)?