QUESTION:
How can you be certain a properly conducted
auction will always attain true market value?
ANSWER:
Market value is described by many as the amount
upon which a willing buyer and seller agree on a property.
Would the value change if another buyer would have paid more at the same time?
Where did this agreed upon price originate? From the seller who based the
price on what he/she thinks, owes, paid, or desires; from the buyer who
based the price on his/her needs, abilities, or opinion; or the appraiser who
based the price on previous sales of other properties and circumstances?
The risk in a private treaty sale, selling the property privately, is in
setting a price. If the price is set too high, the market will ;not respond,
even with an offer in many cases. If too low, the market will buy the property
and the seller will never know how much he left on the table.
The only way for the buyer and seller to know for certain if they will either
respectively pay or attain true market value is for the entire market place
to decide through a competitive ;bidding process with no artificial restraints.
The final price may be higher or lower than anticipated in this pure market,
but, if conducted properly, auctions will attain true market value for the
buyer and the seller.
|
