Market Weighted Asset Model

I propose a more comprehensive approach, weighting each prospective buyer's valuation of the property by the probability that the market will allow the property be acquired by that class of buyer.

There are two relevant questions here:

• How much is the property is worth to prospective buyers assuming immediate asset absorption by the market.
• What is the probability of the market absorbing the asset by the intended buyer.

For instance the property may be more valuable to condo developers than homeowners, but if the condo market is over-built, then it is unlikely that the property will be purchased by a developer in the foreseeable future however the homeowner is aware of this potential increase in value and will pay a premium for the property.

To see how our model handles this, remember in our sample $100,000 property, we assumed the property was of equal value to the homeowner, the developer and the investor. This is rarely the case. However the market value of the property could still be $100,000.