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  • Property-a-holics

    Market Value Vs. Ceiling Price ....

    You don't ... until you SELL at that new ceiling price. That is why it is risky. It's all a moot point until the money is in the bank imho.
    You cannot bully the figures into working to give you a profit. You can take a risk though and that is all it would ever be.
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    Dan,
    It is unlikely although as Vanessa says not impossible to raise a ceiling price unless you are in a rising market. That is not to say we are not experiencing rising markets in limited pockets around the country. However, these are normally due to adjacent development ie New infrastructure or the Olympic Games for example.
    The key particulars to understand are cost and value.
    Cost is defined, its fixed, its the amount paid for something
    Value is subjective. No matter how qualified the opinion is or what statistics the numbers are based on, it its simplest form its a guess, all be it an educated one.
    Feel free to read my article on cost vs.value.
    Vanessa,
    Your tanget point raises an interesting issue and is relevant to my own circumstances. Recently one of our neighbours sold their house for 30% less than 'market value' Cathy and I have now therefore 'downvalued' our asset to the same level for reporting purposes.
    Sounds a little stuffy although I feel it important not to over value assets. Its also important for people to realise with value that it is also only 'real' when the cash is in the bank. Although we have no intention to sell our family home for the foreseable future, I feel it wise to reflect our position accurately rather than 'willing' values higher than they currently are.
    Rob
    Property Consultant, Wakefield, West Yorkshire
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    Rob Hubbard said:
    Fernando,
    Excuse me for jumping into a question that you have directed at Vanessa. However, we have been speaking off forum about related matters for the past few days.
    The answer to your question is relatively simple.
    Value is subjective, ie an opinion, an estimate, not proven.
    A ceiling price is objective, price paid and therefore proven.
    Fact trumps Opinion every time!
    Rob
    Property Consultant, Wakefield, West Yorkshire
    Rob,
    The way you wrote the above it sounds like CP is an absolute rather than just an artifact of history. CPs are breached or broken all the time. It is nothing more than the highest price achieved until something higher happens. Then there is a new CP. While CP is always going to be the maximum achieved so far, there will always be a higher number as the market moves up over time.
    Are we agreeing with each other or disagreeing?
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Hi Rob and John.
    This is why I thought I would bring the discussion, as I assumed that no matter how much cash injection, the property wold always be worth x price in the street until the market moved up, then it would be a simple case of buying BMV when the priced rised...
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    Dan,
    CP is not an absolute or even really much of a benchmark. It just means the highest price achieved in the past. If the street has 2 bed bungalows with great lots and someone adds a 3rd bedroom and then that house sells for a new high, did the CP for the street change? It is no longer a 2 bedroom so not comparable to other houses on the street. At the same time the houses on the street which could also be expanded might not be worth more.
    Comparable property could easily be on a different street. If the other 3 bedroom homes are a few streets over anyone looking for a 3 bedroom would naturally consider the others (even if to just screen them out). A property in a half mile might be valid as a comparable if everything else is similar (school catchment, etc). It really comes down to the specific property and what is the most similar.
    Each house is different so there are rules/guidelines but not absolutes. The trained expert makes adjustments to compensate for differences based on how the market values the individual differences (condition, features & fittings, access, catchment, etc).
    John Corey
    Follow me on Twitter-> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    John,
    We are agreeing!
    Value cannot be absolute until it becomes crystalised and as it becomes cost.
    A ceiling price is a recorded cost until such time as it is superseded by a later transaction, it can only go upwards as you say. I think it is important that its stated that in many areas the current values are well below the ceiling price, even more so than the 'average' price for lets say a street.
    I have been trying to read between the lines on the thread as I think Vanessa and others have too. Trying to understand why the ceiling price is so important on this occasion or is it just a general enquiry?
    I still maintain that the ceiling price is unlikely to rise outside of a rising market apart from in exceptional cases.
    Rob
    Property Consultant, Wakefield, West Yorkshire
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