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Comment by ggg9990 | Hacker News Reader

If Bill Gates takes a fancy to a $100,000 mountain cabin and the owner doesn’t want to sell, he could offer $10 million for it, but that doesn’t increase the market value of the cabin.

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Real-estate runs on comps, and the sellers of other houses in the neighborhood love to use the overvalued ones to boost their asking price. In my experience, homeowners always nosily follow their neighborhood sales hoping for overvalued prices because they bring up the going rate in the neighborhood.

Plus, if Bill Gates buys a hours in your neighborhood, it's more or less guaranteed that the prices go up on name recognition alone.

Well, it might move it a bit, once word gets out and other people want a cabin too, like Bill Gates.

Depends on the fungibility of cabins. If the $100,000 cabin next to yours sells for $10 million, you'd better believe it's going to change your cabin's appraisal.

10MM is exactly the market value of the cabin, for as long as the bid stands.

Once the owner accepts that bid, the liquidity in the market has been completely taken, and the likely future market value reverts to ~100,000.

So by what value is market-value determined then?

If X is willing to pay Y the value is Y.

In the context of real estate, what the remaining potential buyers are willing to pay after Bill Gates spends ten million on a hundred thousand dollar property.

Not at all. One buyer does not drive a market.

cryptocurrency would like a word with you

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