Fair Market Value
The basic laws of supply and demand greatly impact what a buyer is
willing to pay for property and the amount financial institutions or
lenders are willing to finance. Fair market value is defined as the
likely price a ready, willing and able buyer is willing to pay for a
property when:
- The property is offered for sale on the
open market.
- The property is marketed for a reasonable
period of time.
- The buyer has a complete understanding and
knowledge of the property.
- Neither the buyer nor seller is under
abnormal pressure.
Determining Property Value
The Market
The market approach is based on the premise
that a prudent person will pay no more for a property than it would
cost to purchase a comparable substitute.
Competitive Listing and Sale Prices
To form an opinion of value, I will analyze
current listing and sale prices of similar homes in your area. I will
consider properties that have recently sold, are currently for sale,
or were offered for sale but did not sell. Although none of these
properties is identical to yours, only those that have a high degree
of similarity are noted in this report.
Comparative Evaluation
I can prepare a detailed description of your
property and an estimate of the selling price range in today's market.
This is known as the comparative or competitive market value of
property.
Staying Current With Market Value
Once your property has been listed, I will
continually collect and review updated information to monitor the
offering price.
Observations may include:
- Professional opinions
- Industry (broker) response
- Buyer reaction
- Current market conditions
- Competing properties
- Availability of financing
- Number of showings
- Length of time on the market
- Interest rates
- Condition of the property
- Seller motivation
Factors That Do Not Affect a
Property's Value
- What the owners paid when they built or
bought the property
- Some of the improvements and upgrades the
owners have made to the property
- The cash proceeds the owners want or need
from the transaction
- What friends, neighbors, or relatives say
a property is worth
Factors That Do Affect a Property's
Value
- Style, condition, age, decor
- Location
- Time of year
- Property and neighborhood
- How quickly seller needs to sell
Competitive Pricing: The Pricing of
Choice
The probability of receiving an acceptable
offer on your property and completing a sale diminishes significantly
when your asking price is higher than the current market value.
Here are the factors that will determine price range:
- Your property - its strongest selling
points
- The competition - the asking prices of
other homes for sale in your area
- The expired listings - homes offered for
sale that did not sell
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