Fair Market Price In Direct Sale?

just a quick question, would not fair market value be what you are willing to pay to buy the apartment? You have access to comps for the area i would assume, weight everything against those sales versus the apartment you live in and decide.

A broker who knows the neighborhood can provide a good Competitive Market Analysis - basically an opinion of fair value supported by closed and on-market comps. For a higher level of formality, you might enlist a licensed appraiser, though the results will probably be about the same.

Thanks West81 - that is helpful.

Yes, Mike, that's exactly what a fair market value would be. I have the comps and know what the place is worth in my mind .. it's just a matter of how to have this confirmed and presented formally, and in a neutral fashion, to both parties.

problem is and this is just my view, there is no such thing as a neutral party. A broker engaged by either party is getting some sort of compensation and will therefore push their FMV as being the right view.

You need to sit down with the landlord and make an offer based on your own research and feelings.

I just do not see how getting a broker in the middle is going to get you anywhere.

fair market value is what a 3rd party would be willing to pay for it. looking at comps is the only way to determing FMV.

I do this for clients in my market (downtown Manhattan) and I'm pretty sure some Brooklyn brokers would too. As West81st notes, you're really looking for someone who is a neighborhood specialist, because the more experience they've had with the sold comps, knowing the conditions and situations, the more accurate they're going to be.

In some circumstances a local agent is going to give you better information than an appraiser, because they'll know the submarket better.

Of course every comp has a couple of sides to it, but if you're really looking for neutrality, you can ask for a CMA without mentioning the target price of your target apartment.

ali r.
DG Neary Realty

Ali and West81st - is that something you could request from a broker and use in negotiations? Do they cost a lot? Say you were looking at several different neighborhoods - would it be prohibitive or worthwhile to get a competitive market analysis from several neighborhood experts?

Don"t mean to hijack the thread - this is the kind of service I wish I could buy from brokers, so I;m curious.

evnyc - I think a CMA is a valuable tool for a seller and a listing agent who are trying to set an asking price. CMAs also have applications in areas like trusts, gifts and estate planning, where it's necessary to establish a market value for a property without actually offering it for sale.

As a buyer, I think a CMA could be a waste of money unless you have a prior agreement with the seller to abide by the results. Otherwise, you risk spying for a CMA that you find highly persuasive, only to have the seller say, "That's a nice report, but I'm still not selling the apartment for less than $X."

Sorry, "spying" should be "paying". Freudian slip, maybe.

By the way, CMA can also stand for "Comparative Market Analysis". I've also seen the term "Comparative Value Analysis." I think they're all basically euphemisms for an appraisal by somebody who isn't licensed to do appraisals.

Interesting input from all of you. This was why I initially wrote "advantages and disadvantages aside." Although one other approach could be to come to your own conclusion on value independently and based on comps and then suggest that the seller do the same with the help of a qualified outsider that he chooses. In the end you're either on the same page or you aren't.

I do have some very relevant comps - two sales in the last year in the same building for same square footage units. But the extenuating circumstances (eg remodeling work done on different apartments, position in building, etc) are where a local expert and realtor or CMA would come in handy.)

I guess motivation is everything, and if it isn't there for the landlord there isn't much I can do.

Thanks, West81st. Good points. I'm just so tired of seeing these vastly overpriced listings asking 30% premiums over 2007/2008 comps. Forget 2009 - by that comparison they're even more overpriced. I just wondered if having that kind of information available would be useful if making an offer, but it sounds like it wouldn't be.