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COULD THIS HAPPEN IN REAL ESTATE - A JUDGE DECIDING FAIR MARKET VALUE?

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Real Estate Broker/Owner with Veritas Prime, LLC dba Veritas Prime Real Estate CT, NY, FL

COULD THIS HAPPEN IN REAL ESTATE - A JUDGE DECIDING FAIR MARKET VALUE?

 

Fair market value in real estateA scary thing happened on Wall Street in June of 2016. In response to a shareholder law suit, a judge in a Delaware court declared that the price for the sale of Dell Computer was $6 Million short of what it should have been. This is after the price had been agreed upon at the conclusion of lengthy and detailed negotiations and accepted by both buyer and seller.

 

In effect, the upshot was that the judge had overruled the time-tested, free-market-cherished concept of “fair market value” by imposing a “correct” price on the sale. International Valuation Standards defines market value as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.” (Wikipedia).

 

All the above elements were present, it was not a case of any sort of preferential treatment, or underhanded insider trading. There was no higher offer, yet the price was deemed to be too low by a judge.

 

Could this happen in real estate? It’s not likely in a situation, where a single family home is changing hands, but what about commercial real estate, where there might be multiple owners or investors, or if the assets were held in a corporation? Or could we have a situation, where a Home Owners' Association or a condo association might decide that an owner is “dumping” his unit and sue on the platform that the sale is not fair, that the lower price will impact the rest of the owners’ property values and is in effect too low, even though market value might suggest otherwise?

 

Not probable? Well, no one anticipated the Dell situation, either. Our legal system is heavily based on precedents, so who knows? We already had the Supreme Court sort of deciding the outcome of a presidential election. So, can a judge wind up deciding fair market value in a real estate scenario? Time will tell.

 

Note: image courtesy of Jan Pietruszka of freedigitalphotos.net

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Ted Glover
Alderman Classic Realty, LLC - Moultrie, GA
ABR in Moultrie, Georgia 229-854-5422

How would you know when some judge or attorney wants to make a precedence and for his favor.

Oct 01, 2016 11:37 PM
Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I have always said the judicial part of government is getting too strong.

Oct 01, 2016 11:44 PM
Emily Medvec
eXp Realty LLC - Santa Fe, NM
Broker | Realtor | Serving Santa Fe & Northern NM

Anything can happen in real estate! This is certainly a precedent that could be applied during any shift in our market whether up or down. It also may be applicable to foreclosed properties and how bank and auction sales impact a neighborhood and local market. Imagine an HOA with a real estate attorney on its board...

Oct 01, 2016 11:51 PM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Ted Glover - it's true - judges are often elected officials.

Oct 02, 2016 12:00 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Harry F. D'Elia - checks and balances!

Oct 02, 2016 12:00 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Emily Medvec - We'll be watching!

Oct 02, 2016 12:01 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

OH wow....I agree with the others that you never know in real estate

Oct 02, 2016 12:32 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Kristin Johnston, Waukesha County Realtor 414-254-6647 - yes, always new developments.

Oct 02, 2016 01:11 AM
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

I agree - judges have gotten out of control in making laws based on their own opinion. The next logical step is them determining property value. Scarey to think about.

Oct 02, 2016 03:52 AM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Olga well I wouldn't be surprised if this did happen at some point. Hard to imagine with a single family home but then again it does happen with divorces if one party isn't be fair and truthful as to the value of the properties.....so who knows. Interesting topic for sure!

Oct 02, 2016 04:40 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Lynnea Miller  - exactly my point - are property values next?

Oct 02, 2016 05:37 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Anna Banana Kruchten - I don't think anyone would be too surprised, Anna. We'll see how things develop.

Oct 02, 2016 05:38 AM
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

Judges often do not interpret existing laws but decide to create new law from the bench...nothing would surprise me any more.

Oct 02, 2016 05:41 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Susan Haughton - and lawyers look for precedents, so here we are...

Oct 02, 2016 05:54 AM