Market Value of Real Estate Property

Determining the market value of real estate property

Market value is the value of your house as seen through the eyes of a prospective buyer who has many properties to choose from.

A Comprehensive Market Analysis is essential to determining value. This market analysis has many elements:

• Location is one of the most important elements.
• Characteristics of the property is another.
• Similar properties for sale in your area are considered.
• Recent sales of comparable properties are also included.

Goal is to determine a price that will attract a willing and able buyer, in a reasonable time, at the best price:

• The price should not exceed market value by more than 5%.
• If overpriced, potential buyers may not even make offers.
• Overpriced houses get ”stale” with buyers and agents quickly.
• Long marketing periods can be expensive due to loss of buyer interest and “wasted” mortgage payments.

Things to keep in mind about pricing:

• Realistic pricing will achieve maximum price in a reasonable time.
• Profit desire is irrelevant; the market determines the price.
• The cost of improvements is almost always more than their added value.
• Houses that remain on the market for a long time lose interest and do not get shown.
• A house that is priced right from the beginning achieves highest total net income.

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