Of much discussion in front of the post office these days is Oak Spring, the Mellon farm that is now on the market following the death of the 103 year old Rachel “Bunny” Mellon on St. Patrick’s Day. The list price is $70 million, which has initiated lots of chatter as to whether or not it is “worth” that price. Because a competitor lists it I would not presume to offer an opinion of value on this blog site although I am more than happy to become the buyer’s agent for anyone looking for property in that price range.
All the Mellon property chatter highlights the entire quandary of determining market value in real estate. As realtors we give our sellers an opinion of market value, usually based upon recent comparable sales. This is not to be confused with an appraisal which is value established by a certified appraiser. Neither is it to be confused with the assessed value established by the local governing body for the purpose of determining real estate taxes. Don’t even get me started on Zillow! No matter which approach is used everyone has a strong opinion about the result. This is one area of real estate in which almost everyone seems to be an expert, which causes lots of heated discussions.
Invariably Jack and I will list a property after much discussion about the price with the sellers and two weeks later they call to tell us that they want to RAISE the price because their “sixth cousin one removed has just visited from Texas and told them that their property” is worth at least several hundred thousand more than the listing price”. Besides, their neighbor’s house (which is only 10,000 square feet larger than theirs) sold for more. Having lived in Texas for 16 years I can tell you that I knew lots of very intelligent people there so I harbor no prejudice against Texans. However, to use a Texas expression, people from Texas offering opinion of value for real estate in Middleburg could very well be “all hat and no cattle.”
Pricing is the hot button throughout the sales process. If the seller accepts his first offer the buyer is convinced that he should have offered less. If the appraisal comes in above the list price the seller wonders why the property was not priced higher (and sometimes asks if he can go back and ask for an amount ABOVE that specified in the ratified contract).
It is important to keep in mind that an opinion of value in real estate is not an exact science and certainly subject to many variables. One never knows when that one buyer in a million who ACTUALLY wants a kidney shaped pool painted in bright fuschia may just turn up and be happy to pay the full asking price, maybe more. However, more often than not no one but the seller will see that feature as something that will enhance the property value. Well, maybe in Texas if the pool is large enough . According to the strict definition of market price once the buyer agrees to pay that full price and the seller accepts it, fushcia pool and all, that is the market value for the property. Even in Texas.