Typically, market value refers to a price assigned to a “real property” by a professional appraiser or real estate agents in an open and above board negotiation. There are many key factors which determine the fair market value of a particular asset. During a tumultuous economic period, such as we are presently experiencing, market values tend to fluctuate greatly. When it comes down to it, the market value is truly driven by how much the prospective buyer is willing to pay for a property.
A general understanding of a properties’ market value is important for a variety of reasons. First of all, this understanding allows the seller to begin at a realistic starting point as the property hits the market. A selling price which misses the mark of the realistic market value will turn potential customers away with no hope of negotiating. On the other end of the spectrum, a property offered at a price well below market value may cost the seller any hope for a well deserved profit from the sale. An accurate property appraisal also serves to protect the seller from predatory lenders. Predatory lenders attempt to get the client to borrow more money that the property is worth.
The most common method an appraiser employs to determine the market value of an asset is to research the costs of similar properties (homes) in similar environments. Certain factors utilized to determine similarities are the square footage of the home, transaction prices of homes in the immediate area and the age of the property.
Some other factors influencing the market value of properties are recent upgrades to the home. Upgrades can include anything from the inclusion of more desirable finishes such as natural counter tops to additions which increase square footage. Kitchen and bath improvements are factors which have the greatest affect on a homes’ value.
