Market Value Basics
Setting the right price for a property is important whether you are planning to sell or buy a home. Only by knowing the right market value can you judge the right price for a home. Most people do not understand what market value is and end up selling their homes at a loss or paying too much when buying. If you wish to make an intelligent decision when buying or selling a property then it is crucial to fully understand what market value is.
The first thing to understand is that the assessed value of a home is not its market value. The assessed value is used by the tax authorities to calculate property taxes. Each municipality has different factors that drive the assessed value. The market value of the property is calculated by taking into consideration the state of the market, recent sales of similar property, current availability of similar property, and other conditions. These two values are completely unrelated and can be vastly different.
A Realtor or Appraiser has to factor in many things when determining market value. For example the neighborhood has less to do with assessed value than it does with market value. A good neighborhood means higher market value. The location of the property is equally important. The property is assessed based on things like proximity to business districts, highway, town center, and so on. Taking a line from the hotel industry, location is everything.
The next thing is the condition of a home. Newer or well-maintained homes have higher market value. Homes typically in need of repair have lower market value. The more repairs needed the lower the market value.
After all of the data is collected the home is compared with similar homes in close proximity. This comparison will include recently sold and on-market homes with a similar market value. Based on all this data the market value is calculated. In today’s market, values can change rapidly and it is best to reevaluate your price regularly.
Contact your Realtor for a market analysis of your property. This way you can compare the results for yourself. Quite often you will be given a range as to the market value. Your agent is the best resource you have available to you when determining a homes value. Whether you are buying or selling their professional advice and guidance is critical.
Chris Farkas
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