Randal:

Who determines value? Stay tuned. Welcome back to Stay Focused, Focus Real Estate's weekly video series. And we're here to talk about value and what's fair. 

Erik:

Is a question in this market. 

Randal:

Is there such a thing as fair? Well, if you were to define fair market value, what would that be, Mr. Gold? 

Erik:

It is the price that a ready, willing and abled buyer is willing to pay for a property when neither the seller nor the buyer are under undue duress or stress. 

Randal:

Do you think that there's anybody that's under undue stress in our market today? 

Erik:

Sellers aren't stressed, but boy, buyers are. 

Randal:

I think sellers are a little bit stressed too, but I think that really the stress falls upon the buyer's shoulders, right? 

Erik:

Right, trying to find a property, trying to compete with other buyers. It's a lot, it's very stressful. 

Randal:

We can go in and share with a client as a seller to say this is what the comparables are showing us. These are the relevant sales for properties in your neighborhood, but we don't know what those buyers in the marketplace are gonna do when we expose your property to the marketplace. 

Erik:

And they start competing with each other and creating that duress and stress and strain on price. 

Randal:

And so anomalies happen, right? These huge swings in prices happen when there's not enough inventory, buyers are looking to purchase homes, we have very low interest rates, then what happens? So basically what's starting to happen or what has been happening for a number of years now is that we're seeing an escalation in prices because buyers are under stress. And is that mean that the prices that they're paying are unfair or they're not real? 

Erik:

No, but it's hard to predict because it's not your typical fair market pricing. And it's hard to predict what anyone is gonna do when they're under stress! 

Randal:

But you know, kind of looking back into the market of 2006, -07, -08, -09, -10, and -11, who was under stress there? It was the sellers who were under stress, right? So they were willing to take less for their properties because there was a ton of inventory. There was a ton of competition. Buyers were wicked complacent. And if they placed an offer you just felt like you were lucky at that time. So really it was the sellers that were under distress at that time. 

Erik:

But we're in a different market now. 

Randal:

So we bring this up because it is sometimes hard for us to tell exactly where the market's gonna go, right? Where we are often surprised where it goes to. Where we come in property evaluation is a little bit more artistic than an appraiser. And then we don't know how artistic the buyers out there are gonna get and what their desire is for this property. 

Erik:

But from our best experience, we have to anticipate what is possible in a market like this with buyers under stress, competing with each other. 

Randal:

So if we got nothing else for you we're gonna have to say until next time. 

Randal and Erik:

Stay tuned and stay focused. 

Randal:

What else do we got? 

Erik:

I think we said a lot.