Liquidation Value for Multi-Tenant Retail Bldg

[J Grant]

An interesting question...if an auction was marketed weeks in advanced, widely advertised, and property address published so buyers had time to drive by/view the property, the marketing efforts might equal that of a property listed on MLS.

An auction just adverstised a few days prior and notice published in a local courthouse would have marketing inferior to MLS or even other well attended auctions.

A competitive bid environment can also drive prices up, just due to the nature of the bidding itself.

 

[DWiley]

Danny I am curious, can the definition of liquidation value be that of the "client"? ie they provide the definition, perhaps their own, the conditions of which the property must be appraised? This could be a non published definition (which could include considering a closed transaction within 90 days of the effective date of valuation) to which the appraiser must appraise the property providing reference to the client as the source of the definition?

Yes. USPAP does not require the use of any specific source for the value definition; it merely requires citation of the source. The client can be the source.

The appropriate value definition for an assignment is based on the intended use. If the intended use to to evaluate liquidation value or disposition value, based on client parameters, then use of the client's definition is consistent with the intended use.

 

[tsiegel]

An interesting question...if an auction was marketed weeks in advanced, widely advertised, and property address published so buyers had time to drive by/view the property, the marketing efforts might equal that of a property listed on MLS.

An auction just adverstised a few days prior and notice published in a local courthouse would have marketing inferior to MLS or even other well attended auctions.

A competitive bid environment can also drive prices up, just due to the nature of the bidding itself.

In some cases the marketing efforts made by the auctioneer are, in fact, far superior to that of a broker listing the property in MLS or whatever directory.

For example, I know of a rock quarry that sold at auction in my state recently. There are a limited number of buyers of this property type. It doesn't appeal to any old real estate investor. Furthermore, there is a limited supply of rock quarries available for sale in the state (like none). The auction was marketed to these likely buyers directly and most of them showed up to the auction. I use that sale as a comp and consider it reflective of market value. If that property was listed on MLS, the first dirt/rock guy to see would have bought it immediately. Not necessarily adequate market exposure.

 

[J Grant]

Interesting re auctions...if they take bids by phone, then it opens up the buyer pool to national or even international buyers...not that they would be attracted to all propreties, but for certain properties, it would be as you said superior marketing.

Odd about auctions....they seem to either attract low prices for low end auctions on courthouse steps or the like, or higher prices than typical due to competitive bid process, I know nothing about auctioneer skills but have heard the best of them can get higher prices just by their timing, patter, etc.

I did attend a couple of art autcions at Sotheby's years ago in NYC (did not bid of course, lol), and it was amazing to watch prices climb by hundreds of thousands in a matter of minutes ...the autcioneer taking international bids by phone and the local monied NY crowd bidding against the "mystery" buyers (who likely some of them knew.) The atmosphere was electric and I would bet that some bid higher just to deny someone else getting the piece.

 

[PropertyEconomics]

Yes. USPAP does not require the use of any specific source for the value definition; it merely requires citation of the source. The client can be the source.

The appropriate value definition for an assignment is based on the intended use. If the intended use to to evaluate liquidation value or disposition value, based on client parameters, then use of the client's definition is consistent with the intended use.

Thanks Danny ... that was very much my thought on the definition. I certainly appreciate your confirmation.

As always I very much appreciate your insight.