I Wouldn't Give A Plug Nickel For It!

Several years ago before the housing values drastically fell, the subject of market value was a pretty heated topic to several clients.  I had a few clients who really needed to know the market value of their homes and other property so we could provide a net worth statement to the bank.  They were looking to borrow money to buy things like commercial real estate and other business interests so it was pretty important for the banks to know what they could get if it came down to selling a property to be paid back.

The market value of a thing is set at whatever another person is willing to pay for that thing.  I could list my Honda for sale at $50,000, but that isn't the value of my Honda.  If the most I can get for it is $18,000 then that is the market value.  It has nothing to do with tax value or the value your neighbor claims his property is worth.

Leaving out the boring details of how you would arrive at a market value of a thing, I'll bring you into my conversation with a grown business man who refused to believe that the market value of a property was what I had listed, which was based on appraisals and other public data.  He wanted me to change the value to a little more than double what I had entered.

"I will be happy to change the value to whatever you want it changed to, but the bank will ask you for proof of that value when you apply for the loan."  I said.  "You're damned right you'll change it.  I would never sell it for that amount.  If it came to that I would sit on it until I died." he exclaimed proudly.

"Yes, but when you are borrowing money and using it as collateral for the bank they need some kind of supporting documentation that backs up the amount you list." I warned.  "The bank will use whatever number I give them because it is my property." he demanded.

We went in circles over this for as long as I could tolerate it and I did change the number, the bank did ask him for supporting appraisals, and his loan was held up because of this and other discrepancies.

The bottom line here is that you can't just make up a market value for your home, your car, or the pen in your front pocket.  If no one is willing to buy it for the amount you set, then it isn't worth a plug nickel.