Price vs. Value
I have no argument with the primary thesis of the Angry Poodle Barbecue of February 17. However, as a professional appraiser, I feel compelled to point out that purchase price and market value are not, by definition, the same thing. California State law (Prop. 13) requires that a property be re-assessed by the county upon most transfers (e.g., sales). The law further requires that the re-assessment be based on market value as of the date of the transfer. Market value is estimated by a valuation conducted by a professional appraiser on the County Assessor’s staff. Market value may, or may not, be equivalent to sale price.
As a practical matter, in the majority of cases, the market value is determined to be equivalent to the purchase price. After all, what better evidence is there of value than the meeting of minds of a willing buyer and a willing seller? However, it is wrong and not consistent with the law to simply assume such is the case. The appraiser could find that the purchase price was less than market value. This happens from time to time. And, while certainly not common, there have been cases where taxpayers have successfully argued that they paid too much for a property.
In the cited opinion piece, it is stated, “The fact is Warner paid twice what the hotel was worth at the time and everyone knew it. In so doing, he established the market value he now claims is unjust.” I have a couple of problems with this. First of all, Warner may have overpaid for the Biltmore, or he may not have overpaid for the Biltmore. In any case, “and everyone knew it” is not a reliable source for a statement. (Well, except in Trump-world.) The second thing is, as I point out above, by law purchase price does not “establish” market value.
I am sure the Independent agrees with me that it is important for a journalist to to get things right. It is all about credibility. For me, the principle point of the piece is obscured by not getting the facts straight.