Price and Value
February 9, 2007
The fair market value of a property has long been defined as the price a willing seller will accept and a willing and qualified buyer will pay. The definition naturally implies that there may be some negotiating to arrive at a price acceptable to both parties.
A question often asked during such negotiations by both the seller and the buyer is: "What is the property really worth?"
Real Estate agents attempting to answer this question will turn to past closed sales, sales in escrow and current listings, the traditional "market analysis."
It seems that valuation sites are cropping up everywhere on the internet. We have this burning desire to know what our property is worth or what the one we want is worth. Fortunately or unfortunately, depending on your perspective, value is not absolute and selling price will be determined by market conditions. How large a pool of similar properties are on the market? What is the motivation of a particular seller? Just consider, an umbrella sells for $20 when there is a storm anticipated, and $5 in the summer season. If you watch the Antiques Roadshow you will note that appraiser will give a value "at auction", an insurance value or a retail store value. These may all be different and are reflective of the purpose for which a value is given.
Presently in our real estate market, selling price becomes a measure of value, motivation (demand) and supply and it will be the result of all of these factors.
The fair market value of a property has long been defined as the price a willing seller will accept and a willing and qualified buyer will pay. The definition naturally implies that there may be some negotiating to arrive at a price acceptable to both parties.
A question often asked during such negotiations by both the seller and the buyer is: "What is the property really worth?"
Real Estate agents attempting to answer this question will turn to past closed sales, sales in escrow and current listings, the traditional "market analysis."
It seems that valuation sites are cropping up everywhere on the internet. We have this burning desire to know what our property is worth or what the one we want is worth. Fortunately or unfortunately, depending on your perspective, value is not absolute and selling price will be determined by market conditions. How large a pool of similar properties are on the market? What is the motivation of a particular seller? Just consider, an umbrella sells for $20 when there is a storm anticipated, and $5 in the summer season. If you watch the Antiques Roadshow you will note that appraiser will give a value "at auction", an insurance value or a retail store value. These may all be different and are reflective of the purpose for which a value is given.
Presently in our real estate market, selling price becomes a measure of value, motivation (demand) and supply and it will be the result of all of these factors.
posted by shirley harry at 11:09 AM
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