Our Los Angeles Real Estate lawyers were required to determine and analyze whether a listing price of a real property could evidence actual or market value. After briefing motions and oral arguments at the trial court level, the answer is simply “NO.” A listing price can never be offered as evidence of the actual or market value of a property.
Under 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.) Additionally, “actual value” has been held by California courts to mean and refer to “market value.” See Nece v. Bennett (1963) 212 Cal. App. 2d 494, 497; see also Bagdasarian v. Gragnon, (1948) 31 Cal. 2d 744, 753. 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). Market value under California law is what a willing and able buyer would pay, and not what a seller decides to list the property at. If Defendant was allowed to state damages based on a listing price, principles governing property valuation in real estate fraud, partition actions and eminent domain proceedings would be completely turned on their respective heads.
Indeed, our State’s Legislature codified this principle with respect to the admissible evidence pertaining 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.) California law is clear in that listing prices or offers cannot be used to establish the value of real property no matter what the circumstance may be.
Thus, the listing price will never evidence actual or market value of property under well-settled California law.