There is ongoing discussion among buyers, sellers, realtors, appraisers, and real estate webmasters about the value of a home and how true value is derived. Value, in some cases, can end up being a mere opinion according to who is leading the discussion at the time, or what side of the transaction a party is affiliated with. In other cases, value is a determined estimation based on market data. In reality, value is actually not clear cut when it come to real estate.
For instance, “Market Value” is a term used based upon the most probable price an informed buyer will pay for a home, which is then agreed to by a seller. An appraiser can then give an “Appraised Value” derived from his or her professional knowledge, experience, and analysis. In some cases, a home may never sell when a seller sticks to their “Seller Value”, which is essentially the owner’s personal opinion of the worth of their home based upon desired proceeds of the sale.
Realtors will often hear pricing objections from sellers that have no relationship to actual value. Here are a few: “Another agent said it was worth more,” or “Our home is nicer than that one,” or “People always offer less than the asking price anyway,” or “A buyer can always make an offer,” or “We put so much into this home!” While these are all viable points, “Seller Value” does not change how the present market affects a home’s final value.
The value of a home is also determined by the terms of the purchase contract. For instance: Is the seller willing to pay buyer’s closing costs in order to finalize the sale? Is the buyer willing to accept a seller’s counter offer terms if the seller deems the offer price and terms too low? Is the seller willing to do any major repairs that may be called in a home inspection?
Lastly, there are four universal items that will determine the marketing value of any home: Price, Location, Condition, and Terms. Price is the easiest factor to control. With location there is sometimes no control, but a very important factor for buyers. Condition allows sellers to influence buyers with remarkable or not so remarkable features. And, terms can always be negotiated based upon the first three.
A seller may set the price of a home, but ultimately a buyer will always determine the market value. Be mindful of all these factors the next time the discussion leans toward home sales and real estate.
More market value consultation needed? Call me at (760) 382-1082 and let’s talk!