Understanding Market Value
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Prospective buyers determine a property’s value to them based on:
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- Location, design, amenities and condition.
- Availability of comparable properties.
- Economic conditions that affect real property transactions.
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Factors that have little or no influence on the market value of a property include:
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- The price the seller originally paid for the property.
- The seller’s expected net proceeds.
- The amount spent on improvements.
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The impact of accurate pricing:
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- Properties priced within the market range generate more showings and offers and sell in a shorter period of time.
- Properties priced too high have a difficult time selling.
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The Dangers of Overpricing:
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Determining Market Value:
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An asking price that is beyond market range can adversely affect the marketing of a property. |
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A comparative market analysis (CMA) is an effective way to estimate a property’s potential selling price range. A CMA considers similar properties that have recently sold, are currently on the market, and were previously on the market but did not sell. |
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- Fewer buyers are attracted, and fewer offers are received.
- Marketing time is prolonged, and initial marketing momentum is lost.
- The property attracts “lookers” and helps competing houses look better by comparison.
- If a property does sell above true market value, it may not appraise, and the buyers may not be able to secure a loan.
- The property may eventually sell below market value.
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