When you are selling your property, naturally, your most important concern is getting the best price. As a seller, you may have lived in your home for years. You have contributed towards the mortgage each month. You have maintained your home. And now, It is only right that you should reap the rewards of your efforts.
How, do you as a seller get fair market value for your property? We will explain the three factors that influence market value, specific property, present condition, and the 30 to 90 days sale factor.
In this article, we refer to market value, as it applies to single-family homes only. Evaluation methods are different for apartments and commercial properties.
The term 'Market Value' is a broad and confusing term.
'Market Value Definition: "The most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus
Three criteria make up this definition;
- Specific property
- Present condition
- 30 to 90 days
To determine a home's value, most people use an Appraisal or Comparative Market Analysis (CMA).
An Appraisal, is conducted by a certified appraiser, and is a professional opinion of a property's value, based on recent sales of comparable properties, location, square footage, construction quality, floor plan, shopping, schools, transportation, etc. On average this type of evaluation costs $500. Some Lenders may require an appraisal as part of the mortgage application process.
A Comparative Market Analysis (CMA), performed by a Real Estate Professional, is a free, informal estimate of market value, based on sales of comparable properties including many of the variables used in an appraisal. The major difference is that recent sales are the sole source of the opinion and can change based on what is happening over time.
Specific Property
Market value is limited to your specific property. The location and community your particular proeprty is the starting point. The exact same house in another community or on another lake in the area does not affect your valuation. It's a look at the local market.
Property values also fluctuate significantly from community to community and from lake to lake. Therefore, when considering the market value of your proeprty, it must be compared to similar homes in the same or adjoining communities.
Present Condition
The second factor in determining market value is the condition of your property. Is it in "Show Home" condition? Does it need some improvements? The condition of your property determines the number of buyers who may want to view and purchase the property. Condition will affect to the time your property will remain on the market before it sells. Most home buyers want a reasonably priced home that is in good condition. They may look less favourably on a home that requires major work if that is not reflected in the list price.
Properties that require work may take longer to sell. To attract more buyers, the price has to reflect the cost of the repairs that may need to be done. It is all a matter of how much someone is willing to pay for these repairs. Additionally, determining market value for a property that needs some work, is not an exact science based on the availability of supplies and contractors willing to work in the area.
30 to 90 days
In most markets, a property will sell within 30 to 90 days. If it does not, the price is probably too high. If the price is too high, even porperties that are "perfect" will not sell in this time.
On the opposite end: if a property sells within a short period, perhaps the asking price was too low or it could be a sellers market. When there are housing shortages or fear of rising prices, many properties are purchased within a matter of days of the listing.