Bilateral Monopoly

[Ray Miller]

Timley for me on an up coming appraisal.

 

[NC Old Guy]

Had one where I "consulted" some years ago. Lot where next door neighbor built a not so small earthen dam so he could have a pond for big ol' bull frogs. Problem was the dam was built about 4' on lady's property. She wanted it off her lot because she didn't like him shooting the water birds that feasted on his bull frogs. As I told her, max value of her strip of dirt to her neighbor was the cost of removing the dam & then rebuilding it if he still wanted it + the hassel factor of going through all of that + the $$ saved from not having to go to court. He figured it was worth about $1/sqft, the approx avg./sqft lot value. That surely established the two ends, especially since there was about 200 sqft involved.

No economic theory on that one. Just negotiation.

 

[gdkatz]

Definition of Value?

The landowner created 5 divided commercial sites in an orphaned location. The buyers are 5 adjacent commercial property owners, all under contract. One has closed with a cash purchase. One is waiting for the appraisal (me) to close with local bank financing. Pricing is approximately 2x market on all contracts, acknowledged by buyers, seller, local banks and investors. My client holds the mortgage on the buyers adjacent property, and is going to roll the two properties together in the existing mortgage, funding 100% of acquistion price based on perceived/anticipated market value at the contract amount. The problem is the plottage effect is real, but the client does not want to appraise the whole property due to time/$. I am going to supply "market value" based on non-influenced sales, and bilateral monopoly value based on the one closed sale, and others that do not equate in physical terms, but are bilateral monopoly class, and including "use of the appraisal is for client management and reconfiguration of the buyers mortgage on an adjacent influenced property". :icon_question: Question - is "bilateral monopoly" a definition of value, or an influence/exception to the definition of "market value"?

 

[Carnivore]

Question - is "bilateral monopoly" a definition of value, or an influence/exception to the definition of "market value"?

Interesting question. I would lean twoards that being a part of the Value definition verbiage or maybe the title of the value definition: "Bilateral Monopoly Value" or just "Bilateral Value" and being an exception to market value requires it to have its own definition. I dont dont particulary like the use of "Monopoly" in this problem of definition. In www.businessdictionary.com it says:

bilateral monopoly

Definition
Market situation consisting of only one buyer and only one seller. It occurs usually in the intermediate stages of a production process and (since neither party can dominate the other) conditions of monopoly or monopsony do not apply.


Here is an intersting read when your bored:

Nash Bargaining Solution

http://signal.hut.fi/kurssit/s884223_08/Bargaining in two person games_v1.pdf

 

[Mike Boyd]

Upon re-reading this older post, I have concluded that it is similar to estimating the value of fractional interests......specifically, theory "C". If there is such a thing, an advanced degree in Motivational Psychology might be necessary along with in depth interviews with the two parties, their families and friends.

 

[Louis Pompeo]

Option B is the only "Defensable Value" you can come up with.
I recommend it

 

[CANative]

http://appraisersforum.com/showthread.php?t=108950&highlight=gamesmanship

Dock thread...

http://appraisersforum.com/showthread.php?t=108706&highlight=dock

 

[Dennis J. Black ASA IFAS]

Market Value is value in exchange.

The situation you describe is Value in Use. In such assignment the motivation of the particular parties becomes as, if not more important.

 

[Terrel L. Shields]

This seems to be more like the Prisoner's Dilimma in Game Theory

from Wikipedia

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies ("defects") for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

Each should rat out the other....if your goal is to obtain the least jail time. A sum zero game.

 

[gdkatz]

Lots of bleed-over. In my world, Value In Use (Church) implies a specific occupant, but maybe without a seller, but I cannot argue the point made in the thread. Also can argue for the thread on enhancement of the adjacent parcel, but the real world here is get to the end without writing a new bestseller, and rightly so for a $72,000/$143,000 value.

I went with market value for anybody but the buyer, and defined the buyers value as Bilateral Monopoly. If the lender were not to tie the 2 properties in the same mortgage, then they would be behind on B/M value.

I appreciate all the help here. New to this forum, didn't know what to expect, very happy to be here.