Re: what is the real need for a valuation?

"Ronald Raygun" <no.spam@xxxxxxxxxxxxxxxxxxxxx> wrote in message
news:cmvxj.14744$XI.4122@xxxxxxxxxxxxxxxxxxxxxxxxxxxx
Gallagher wrote:

for properties, value is what someone is willing to pay for it and
therefore makes it subjective. eg. an investor may purchase a house for
twice its actual value even though it has a poor location. nevermind the
reasons... does this mean future valuations will be distorted since an
effective comparison cannot be made?

No. What do you mean mean by effective comparison, and why can it not
be made? Provided future valuations remain objective and independent,
and established criteria are used to determine them, then the valuations
will fairly represent "value" (whatever that may be).


suppose a homebuyer chose to pay double for a unique period property because
of aesthetic/sentimental/historical value and there is only one other house
that can
be used for a comparison, does the latter then double in value?


However, in a limited market, it's the turnover which sets the pattern.
Once several investors purchase houses in the same area for "twice what
they're worth", then all houses in the area suddenly *become* worth
twice what they were. Then it's not the valuations, but the actual
values which have become "distorted".

so a new investor would have to pay the distorted value for the remaining
houses?


.

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