Market Value vs Liquidation Value

[glenn walker]

You seem to lack an organic understanding of what a liquidation sale is. If you don't understand it, how can you value it?

I wanna know where the Trainees Mentor /Supervisor is ? It's a shame when Trainees have to come on AF are located in different States and has no assistance . Its seems this is becoming real common and shows just what state this profession is currently in. NOT BLAMING the Trainee but His/Her Supervisor/Mentor.

 

[Carnivore]

http://www.appraisalinstitute.org/assets/1/7/AI_-_801.04_Liquidation_Value_Addendum_(Legal).pdf

What is liquidation value in appraisal?

Liquidation value is the net value of a company's physical assets if it were to go out of business and the assets sold. The liquidation value is the value of company real estate, fixtures, equipment, and inventory.

What is the difference between fair market value and liquidation value?

Liquidation value is typical lower than fair market value as is it allowed insufficient exposure to the investors in the open market . Intangible assets, including the intellectual properties, reputations and goodwill, are not included in liquidation value.

Types of Value- Fair Market Value, Intrinsic Value, Liquidation Value, Investment Value — Valuation Academy

To understand and differentiate types of value is important as valuations are needed in many ways for many reasons. Fair Market Value is the most probable price which a company or an asset would bring in a competitive and open

valuationacademy.com

 

[Tom D]

Hi,
Wondering if someone can provide me with a general 'formula' or a 'calculation' or a 'percentage' way to determine a liquidation value for a single family real estate property?

when in the last 3 years when ALL residential properties were selling in this area in less that 1 week with multiple bids, i would think they were both the same. so, with this changing market, where is the evidence that there is a difference, besides guessing. for REO, liquidation was a sale less than 90 days. when was the last time some of you saw that 90 day market?

 

[Terrel L. Shields]

when was the last time some of you saw that 90 day market?

Well, in Ag... But we never had the large numbers of above list sales in Oklahoma that many (including some in NW Arkansas) experienced. But if everything (including liquidations) is selling under 30 days, then all sales are equally valid indicators of LV.

 

[J Grant]

when in the last 3 years when ALL residential properties were selling in this area in less that 1 week with multiple bids, i would think they were both the same. so, with this changing market, where is the evidence that there is a difference, besides guessing. for REO, liquidation was a sale less than 90 days. when was the last time some of you saw that 90 day market?

DOM alone does not determine when a sale sold under the terms of liquidation value!!

How can people not understand what LV is - it is not simply a sale that sold in a brief marketing time ( since that is also present in a hot market ). LV is a sale that is done with the total terms in the LV definition of value , a Brief or limited MARKETING EFFORT is not the same thing as a brief DOM or market exposure. The LV needs a seller who has a high degree of compulsion to sell

Terrell introduced a 30 day or less marketing time in his post which the OP did not understand- it just muddied up the thread since LV does not need any specific DOM or days on market - the only thing is some clients impose it a specific limited market exposure for subject as an assignment condition.

 

[J Grant]

Well, in Ag... But we never had the large numbers of above list sales in Oklahoma that many (including some in NW Arkansas) experienced. But if everything (including liquidations) is selling under 30 days, then all sales are equally valid indicators of LV.

WRONG, dead wrong.s I can not believe what I am reading here. The OP is a trainee so has an excuse

Under 30 days is not a benchmark for LV, under 30 days only matters if client wants it as an assignment condition for subject market exposure /DOM (or client states under 15 days etc)

A short DOM can have NOTHING to do with LV !! A short dom is also present in a hot market. LV states a seller with a compulsion /extremes compulsin to sell and states a limited marketing effort.

 

[J Grant]

LV and MV can be the same $ amount in some cases. However, the terms of sale and marketing effort and seller /owner motivation are different fro each one, regardless of the $ opinion of value. Though traditionally LV produces a lower probable price, there is no set benchmark that it always does that.

 

[glenn walker]

Disposition Value Is really whats most often used to unload a Residential Property in a short time period. A "true" Liquidation Value is more often associated with Commercial that is hard to sell, has a limited market and often its sold at extreme below price to get it off the books. In Both Disposition and Liquidation Value but the under 30 day benchmark was a standard for many years, especially prior to Internet and digital media and Auctions were most often used on True Liquidation Sales. Today Think of Disposition as marketing and holding price higher for longer DOM than LV Sales.

 

[J Grant]

Disposition Value Is really whats most often used to unload a Residential Property in a short time period. A "true" Liquidation Value is more often associated with Commercial that is hard to sell, has a limited market and often its sold at extreme below price to get it off the books. In Both Disposition and Liquidation Value but the under 30 day benchmark was a standard for many years, especially prior to Internet and digital media and Auctions were most often used on True Liquidation Sales. Today Think of Disposition as marketing and holding price higher for longer DOM than LV Sales.

Many REO sales might meet DV instead of LV - but an REO sale can be MV as well - what was the market exposure and marketing effort ?

LV, DV, and MV are each a concept that impose a hypothetical set of transaction terms to produce the most probable price for their respective value definitions.

Under 30 days was never an official benchmark of LV. However, it was common for some clients to impose a 30 day or less for a subject DOM as an assignment condition. True LV sales probably are never on MLS and might be auction or courthouse steps with very limited exposure, like an announcement in a legal section of a newspaper, for example.

 

[glenn walker]

I place very little weight on Definitions, until I speak with a Client about what their goals are. Until you know all the particulars, its all just a lot of chit chat. On Commercial I ask how fast do you need to sell it as in some cases there are no buyers at almost any price and you need lots of time and exposure. Not intentionally but none of this posts would help a New Trainee its just not that simple.