Price Versus Market Value In Real Estate have never been so far apart as they have been of late. Logic would dictate that they would be one and the same, but the reality of today’s real estate market is that they are often far apart. Market Value is considered to be the most probable price that a sufficiently marketed property would bring in an arm’s length transaction between a knowledgeable and willing seller and a knowledgeable and willing buyer with neither under duress to perform. Price can be what someone is asking, or what it sold at – both are “price”.
Market Value is established by Appraisers and Agents looking at recent sales of comparable properties. Agents can also look at comparable listings, what they will be facing in competition from similar properties offered for sale. The ultimate number used by lenders is that of the Appraiser, the one licensed to deliver an opinion of value. Appraisers use sold comps, a snapshot of the market looking backwards. Agents use a combination, see trends, and can adjust the price looking forward. This is an important difference in a moving market, up or down, and can lead to a disparity between Price Versus Market Value In Real Estate.
Price can be anything, but is usually what the Owner and Agent determine they can sell it for. That can be interesting at times. It is important that price has nothing to do with what someone paid for a property. If it were given to them would you expect them to give it to you? If they paid $200,000 more than it is worth today, will you pay them the $200,000? Of course not. Price is what the market will bear given the amenities, condition and location of the property.
We’ve seen some interesting examples of Price Versus Market Value In Real Estate lately. A property listing at 19.5% below an appraisal completed in the same week the property was listed … and it has generated no showings. The price is definitely right to attract a Buyer, but none have stepped up to date even at that great price! Another example ... a bank-owned property. Banks are quite cautious on their values when they sell, but in this case the accepted sales price was 7.5% less than the Buyer’s loan appraisal. Both of these current situations may seem to reflect a declining market because of the ratio of appraisal to price, but does it?
The market is stabilizing somewhat so maybe they are simply prices designed to get the property sold. That would be a willing Seller … certainly a willing Buyer ... but is it Market Value or a Low Price?
Sometimes prices seem too good to be true. Buyers steer clear of the “smoke’n deal” because they think there may be a problem. Conversely, Buyers at times avoid a high priced property when the Seller is just waiting for their offer. Occasionally, a mistake is made in pricing. If it is high, the property sits on the market. If low, the property jumps off the rack as the opportunity is easily recognized by active Agents and their Buyers.
Our Advice: Whether buying or selling, it is important to remember to make your Price Versus Market Value decisions based on your wants and needs, and your understanding of the Market. People buy and sell for many reasons, not all of them immediately apparent.
Don’t get hung up on Price, Comparable Listings and Sales, Rumors, or Anything Else that will keep you from making a sale or purchase that is a great deal for you and your circumstances. Price Versus Market Value In Real Estate ... like Beauty ... is in the eye of the beholder. See it through your eyes, not those of others.
Lisa Wetzel and Jim Valentine are real estate agents with RE/MAX Realty Affiliates in Gardnerville. They are short sale and foreclosure specialists and certified distressed property experts. Contact them at email@example.com. 775-781-5472 or 775-781-3704
When it comes to choosing professionals to assist you with your real estate needs ... Experience is Priceless! Lisa Wetzel and Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472 firstname.lastname@example.org, www.carsonvalleyland.com
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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County, Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.com