True market value may be increased by using NAA auction professionals
By J.J. De Simone
Perhaps one of the most important lynchpins in the auction method of marketing, “market value” is a frequently used but oftentimes misunderstood concept by buyers and sellers alike.
According to auction professional Darron Meares, CAI, BAS, MPPA, the definition of market value is straightforward.
“It’s the highest price a willing buyer in an open market at that time and date is willing to pay,” said Meares, who is based in Pelzer, South Carolina. “It’s not going to be the same in California as it is in Missouri. It varies market by market.
“People tell us all the time they want to sell something the ‘book’ lists at ‘X’ dollars. But, that’s not necessarily what it will actually be sold for.”
According to the National Auctioneers Association’s official definition, market value is the highest price a property will bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.
The commonality in both of these definitions is that market value can’t always be accurately predicted. While many appraisers do an excellent job of valuing properties or assets based on local market situations, it does not guarantee an item will be sold for its quoted value, said Jason Winter, CAI, AARE, CES, an Auctioneer based in Harrisonville, Missouri.
“Consumers are going to purchase the property at the fairest price,” Winter said. “An appraisal is just an opinion. But, at an auction you have multiple potential buyers telling you what a property is really worth.”
Using an NAA auction professional increases the chances an item fetches a quoted value. NAA professionals are well versed on the best practices of marketing and advertising properties and assets, which frequently results in increased attendees at an event (including people logged on for an online auction).
Regardless, some sellers often believe the true market value of an asset is higher than the actual market is willing to pay. Winters said he has seen many examples of people trying to sell real estate at an auction who were not going to let the property go unless a minimum threshold was reached. After the auction ended unsuccessfully, the seller unloads the property months later at an even lower price than what it would have fetched at the original auction.
“A seller wanted $150,000 for his house, but at the auction, it only got to $140,000. He employed a real estate agent and finally sold it six months later, to someone who was at the original auction, for $135,000,” Winters said.
Regardless, it is important for potential sellers to be cognizant of market trends and be realistic about their expectations for the price at which an item can be sold, Mears said.
“Are you dealing with your ‘head’ price or ‘heart’ price?” Meares asked. “If you have a nostalgic connection to something, then keep it. Money will never make up for lost memories.”
To find other NAA auction professionals in your area or nationwide who can discuss market value with you, click here now or you can click the gold “Find an NAA Auction Professional” button at the top of the page at any time.
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