Value and Worth - section (iii)

This video is a follow on from the previous two videos dealing with value and worth. If you haven’t seen those videos, I would recommend you doing so before watching this one.

From hereon in, let’s focus just on money as being a measure of value, or worth as opposed to anything else.

When we want to buy a product, say a lawnmower, we go into the store and look at the various products on offer as well as looking at their prices. Let’s say you have selected one you want to buy. The lawnmower you want costs $100s. That is what it’s deemed to be worth by the vendor. So, you go to the checkout till with your lawnmower and you pay for it.

Please note that the product is priced in Dollars. Dollars are then used as the measure of its value.

Let’s now imagine another scenario similar to the antiques shop scenario of the first video. Imagine a person enters a second hand car dealership. He becomes interested in buying a car on the lot. The price tag is $5000. The customer and owner might haggle over the price, but they settle on a figure of $4000. The value of the car is therefore priced at $4000. That is what both parties consider the car as being worth in Dollar terms. The price was agreed on in the negotiations.

We could say then that the price, in the lawnmower scenario, was fixed. Contrast that to the car scenario. The price in that instance was not so fixed. The buyer managed to pay less than the price as was originally advertised.

Please note that, in the lawnmower scenario, the price had been agreed between the vendor and the buyer without any discussion having taken place on the matter. There was tacit agreement on the price. Ordinarily, customers buying products in stores don’t consider haggling about price. They just pay the price as it is displayed.

In the car scenario, there was a difference between what the vendor wanted for the car and what the buyer wanted to pay. We must bear in mind that, in real terms, value is only determined by what someone is actually prepared to pay for something.

Let’s now consider the housing market. We are all aware that if you want to sell a house, the normal practise is to ask an estate agent (or in the US, a realtor) to come and view the property and they then make a determination as to its worth. The estate agent will give you a price in Dollars (or whatever currency the Overlords of your country decree is the currency). That then, is the valuation. But that is only what is termed the “guide price”. It’s what the estate agent thinks the property is worth. You will then probably discuss a price range with the estate agent – giving them an idea of the lowest price you are prepared to go to. You agree a final figure. This then is the “asking price”. This is the price that the house goes on the market for.

You, as the vendor, naturally would want to get the highest price possible - as much as you can get for the property. And conversely, a person interested in buying the property, would want to get th