Thursday, February 4, 2010

Intrinsic Value

I've been spending a lot of time dealing with the value of things this week. The value of different homes. The value of different options. The value of laptops. The value of companies. I wish I could be more forthright in this blog, but suffice it to say that my entire job for the next month is around extracting tangible dollars from what is effectively intangible value. 

This is a new challenge. I welcome a challenge. Actually, I welcome a margarita, but a challenge is not far down the list.

Here's the thing about assets: you aren't a good judge of their value. My apartment freakin' rocks, so I think it should be worth more than the market rate per sq. foot, for example. I love it. I think it has lots of "intangible benefits" like the fact that it can comfortably seat 12 people for passover dinner, or the fact that the moldings are ridiculously lovely. Of course, I also love it because it was my first home purchase, and like a childhood teddy bear, it has a lot of emotion for me. Putting a number on that apartment was hard. Necessary, but hard. I was glad I wasn't talked down from that number (knock on wood, ftoo ftoo) too much. 

But the lesson is learned. I can come up with dozens of reasons for a higher price tag, some of which may be valuable to someone else (location, awesome moldings) and some which might not (who invites 12 people to dinner?). And no one cares how much pride I felt when I first moved in, or how perfect the wall color is in the bedroom. No one cares. So, I really can't be the one to accurately price the apartment.

The truth is, only the market prices these fluffy assets. If 12 people thought it rocked, the price would go up. If none did, the price would go down. Like any TV show on auctions or pawn shops will tell you, the group of people in the audience determine the value - and if you have a group that doesn't care about moldings, you might get screwed. If the group is over-weighted towards moldings, you could luck out. But, you can't really argue with the valuation of the group - since that is the market, at that point in time. Of course, when it is your baby, that can really hurt.

I'm selling another one of my babies this month. Not literally, of course - I'm not an evil person. But, I'm putting a price tag and negotiating an outcome for something else which has tremendous emotional weight, sweat and tears associated with it. It's even harder to price than an apartment in Boston, and even harder to hold an open house. Right now I'm inventorying the crown molding, the hardwood floors and the well-selected paint color on the bedroom wall, wondering whether those things matter to the single guy who might be buying the place. Do you even point them out to someone who cares only about square footage and distance to the subway? Can you resist pointing them out, because you value them so much? How much will it hurt when you hear them say "I'd paint the room green...to match my futon"? 

We'll see... 

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