Property Rights – Listing Price Does Not Determine a Property’s Actual Or Market Value

Recently, Gholian Law’s Los Angeles Real Estate lawyers were asked to evaluate and confirm whether a real property’s listing price provided evidence of actual or market value. Following briefing motions and oral arguments in trial court, the answer was a firm: “NO.” A listing price can never be presented as evidence of a property’s actual or market value.

According to California law, the listing price can never represent actual value. [See Simone v. McKee, (1956) 142 Cal. App. 2d 307, 316 (“Moreover, section 3343 provides that the defrauded person is entitled to recover ‘the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received.’ ‘Actual value’ is not the listing price.”) (Emphasis added.)

Furthermore, California courts have defined “actual value” as “market value.” [See Nece v. Bennett (1963) 212 Cal. App. 2d 494, 497; see also Bagdasarian v. Gragnon, (1948) 31 Cal. 2d 744, 753.] In turn, “Market Value,” under California law is defined as:

“The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.” [See C.C.P. § 1263.320(a).]

In other words, California law sees “Market Value” as: the price a willing and able buyer would pay, not what a seller choose to list the property for. As such, if a defendant was allowed to state damages based on a listing price, this would completely turn the principles governing property valuation in real estate fraud, partition actions, and eminent domain proceedings on their respective heads.

The California State Legislature has codified this principle with respect to the admissible evidence referring to property values. [See Cal. Evid. Code § 822(a) (Listing price or offers cannot be used to establish value in eminent domain proceeding.); see also Cal. Evid. Code 822(b) (“In an action other than an eminent domain or inverse condemnation proceeding, the matters listed in subdivision (a) are not admissible as evidence, and may not be taken into account as a basis for an opinion as to the value of property, except to the extent permitted under the rules of law otherwise applicable.”) (Emphasis added.)] Well-settled California law California law has confirmed that a listing price or an offering price cannot be used to establish the value of real property, regardless of the circumstances involved.

This clearly indicates that a listing price will never serve as evidence of a property’s actual or market value.