Uncompelled Hypothetical Investors: Implications for Appraisal Practice

Abstract

That the FMVS’s lack of compulsion assumption is synonymous with the Hypothetical Seller’s ability and willingness to expose his non-marketable asset, to the Hypothetical Marketplace, for ample and sufficient time, is generally acknowledged. What is not acknowledged, however, is (i.) he, being uncompelled, is indifferent between selling and not selling (which is what lack of compulsion means), (ii.) his indifference is manifested in his ability, and willingness, to offer his non-marketable asset for as long as it takes to sell at the going market price (any lesser exposure would be evidence of a material form, or degree, of compulsion to sell), (iii.) the Hypothetical Marketplace is competitive and, thus, the going market price is the competitive price, and (iv.) together, taken to their logical and unmistakable end, they provide substantive proof that any form of DLOM is, and always has been, untenable under a scrupulous application of the FMVS in appraisal practice.