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GLOBAL REAL ESTATE MARKETS FORUM
June 2004

Sol Palha, Christopher Mayer, Chris Sanders, Double Eagle, & Ole Bear

Current essays on Realty Reality, the warfare of Blitzkrieg, monetary policy, the prime directive… And the global real estate markets… by a global cast of characters…

DEFINITION OF MARKET VALUE
(A fatally flawed definition…?)

A definition of market value as stated in the glossary of the most recent edition of the Uniform Standards of Professional Appraisal Practice is “The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1.     buyer and seller are typically motivated;

2.     both parties are well informed or well advised, and acting in what they consider their best interests;

3.     a reasonable time is allowed for exposure in the open market;

4.     payment is made in terms of cash in United States dollars* or in terms of financial arrangements comparable thereto; and

5.     the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

Appraiser's Note:

*Item 4 above, " payment is made in terms of cash in United States dollars* or in terms of financial arrangements comparable thereto" is rather suspect and misleading to users of realty valuation reports, in our view. According to the U. S. Constitution, the United States Dollar is defined as a measure of weight at 371.25 grains of fine silver. The Constitutionally defined US Dollar as a measure of weight for money, does not exist in our legal tender fiat paper money system built upon debt. Our current debt backed money system is based on the Federal Reserve Note or paper token, or what we use for money as US Dollars as defined in the Constitution, but they are not the same. One has value, the other has a perceived confidence in it (similar to a Ponzi scheme or confidence/shell game). Making this distinction, and defining United States dollars as used in the definition of market value for realty valuation, now renders the definition of market value very suspect. The definition of market value in current usage will hold up as long as the Federal Reserve Token legal tender fiat paper money system holds up. If and when the existing monetary system of fiat money breaks down, then the definition of market value used by every realty appraiser in the Land, will not work for real property valuation.  Included with this appraisal report are reprints of pages 21-24 from The Appraisal of Real Estate, 12 Edition, on the subject of market value. The reader will also find a suggested reading list of Internet Essays on the subject of the money issue, which are pertinent to our observations at this time.

Selected Bibliography on the Federal Reserve System

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