Property with Negative Value

[prasercat]

Let's say she owned it free and clear & had to send $17,000 to closing. Then it would have been a negative price, presumably a negative value. Leased land & methane gas from old adjacent land fill affected price a bit

Any negative value sales out there?

It sounds like the owner had a special situation "move out of area" and needed to solve a "personal problem" due to a personal situation. The check, it would seem, is a payment to resolve that problem. The value implication should probably be a "value-in-use" to the owner, which is "negative". However, that is not to say it wasn't a negative market transaction.

 

[The Warrior Monk]

David what you describe is a classic property has has no market value ... positive or negative ... there simply isnt a market for it.

It's true that the value isn't positive, but it is not necessarily true that the value isn't negative. A some point, the compensation to the buyer from the seller becomes great enough for the buyer to accept the risk. You likely won't see that types of transactions recorded as negative numbers. More likely there will be other considerations, with positive numbers, from seller to buyer.

 

[Webbed Feet]

Gotta watch those double negatives

It's true that the value isn't positive, but it is not necessarily true that the value isn't negative.

(LOL.. so you said value is not positive.. then said that it is false the value is not negative. So it's not postive, but it could be negative... That works! LOL )

A some point, the compensation to the buyer from the seller becomes great enough for the buyer to accept the risk. You likely won't see that types of transactions recorded as negative numbers. More likely there will be other considerations, with positive numbers, from seller to buyer.

Once again.... what buyer?

http://www.realestatewebmasters.com/glossary/buyer/

Someone accepting title does not make them a buyer. I'll keep waiting for the debate to catch up with such an assignment being complex because the SOW has to be changed to take into account that the typically used definition of market value is no longer applicable. I believe that once a "seller" has to be the sole entity providing any sort of market accepted "consideration," to get another party to accept transferance of title, then by definition there is no "buyer" even for a hypothetical transaction. I am not sure, under such circumstances, there is even a seller.

 

[CANative]

IMO, negative values are for accounting purposes. If the value is less than a penny it has no market value.

 

[incognito]

I've seen abundant arms length transfers for $100 (the minimum our clerk will record). Basically this is a deed transfer. Using those sales, I have appraised properties at $0. However, until I see evidence of a negative sale price, I will be hard pressed to value a property at a negative number.

Perhaps the best way to state the value of a property which one suspects has a negative value (but can not prove through use of comparable sales) would be to state:

"the opinion of market value is $0, and the subject has additional liabilities and negative characteristics which further diminish the marketability".

I had a subject condo with 600 sq.ft. I had 8 recent sales (transfers) for prices of $0 (a bank giving marketed but unsold foreclosed units back to a condo association) All of the sales were of 800 sq.ft., recent and in the same project. Now it would have been silly to make a negative adjustment for living area, which would result in a negative opinion of value. Instead, I used the above statement.

Just an idea for a possible compromise solution...

 

[CANative]

"A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn."

There has to be a nominal sum to record a transfer of property.

 

[NC Old Guy]

Heard a rep from Fannie/Freddie (I don't recall which) indicate last summer that they had buyers for their properties in the Detroit area expect a check to take the properties off their hands? Fact or fiction? It does indicate a "value" but not one that we usually think about. I guess in their case, they couldn't just walk away & let the city take it back.