Right “Value” is a Win-Win for All

Last week I was at an international young professionals event that was meant to connect local and international young professionals in New York. I had the pleasure of meeting, among many other international New Yorkers, with Zack, a young man in his late 20’s perhaps, engaged in digital communication industry and in the process of buying his first home – a residential condominium in Brooklyn.

We chatted about his pending purchase, which is yet to close, apparently after 8 months of prolonged process! As we were parting to meet other people at the party, what he said struck me: “ I wish I had met you or another appraiser to help me know the value of what I am buying before I signed the purchase agreement.”

I am familiar with this sentiment which often comes after the fact and when it is too late for the parties to retrace steps and get into renegotiations of price, often involving millions of dollars in the case of commercial properties, based on market value of the property.

However, I think, not everyone is short-sighted. In the last eight months I have had two clients who sought our opinion of value, one prior to making a bid for a neighboring property for expansion of their existing space and the other before accepting the offer on a property they owned for years.

In the first case, the neighboring property owner was asking $4,800,000 for a 6,720 sq. ft. property in Brooklyn; and we came up with a value of $2,500,000 after a thorough market research, sales comparison and market income analysis.

In the second case, we provided an opinion of $1,600,000 against an offer of $750,000 on the table, based again on a thorough market research, recent sales of similar vintage properties in the area and an additional value based on Cost Approach.

We were not expected to help with final negotiations in either case; however, we were glad that our clients were now educated and better prepared with concrete information to make good decisions and get into any binding contract knowing fully well that they were doing the right thing in concluding these deals.

We believe, value is what you should get or pay for. It has implications for the long run!

Tony D. Kamath

MAI, AI-GRS

"Price is what you pay. Value is what you get."

- Warren Buffet