What is Market Value

October 28, 2008 · Lee Ginsburg

To determine pricing first one should determine present market value. When assessing residential property four major factors account for I’d say about 75% of the value:

Location · Living area size · lot size· condition/renovations of the property.

Other factors that come into play are the number of bedrooms, baths, bonus areas, in-law potential, color scheme, floor plan, pool, fireplace, single or multi story, attached or not plus more.

These factors need to be compared to recently sold homes in the area. The terms and conditions of comparable sold homes are important. To accurately determine the value you must know if the seller credited back any money for repairs or closing costs. Did the seller carry back a second loan or even a first? You must know if the homes sold had a clear termite report or how much it would cost to clear it. This information is not public knowledge but a good Real Estate Agent (Lee Ginsburg @1-877-LeeSells) can usually obtain this information. All this will help obtain the current market value. Also market trends must be considered. Is the market heading up or down since these comparable properties sold? How long are homes staying on the market before selling. By the way it makes no difference if the seller was a bank or an individual. It is just what the home sold for.

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After reviewing all these factors, you compare your home to the comparable sold homes and adjust the price appropriately. Ah ha… “Adjust Appropriately” is a very loose and vague term. It is subject to one’s opinion. There is no set rule. Cost per square foot is easy but the larger the home the lower the cost per square foot. The reason is adding a bedroom or family room is not as costly as the plumbing and electric required for a kitchen or bath. One simple way to adjust for renovations is get the cost of the renovation and then pro-rate it for age, and condition. One person may be willing to pay more to live near a main street with public transportation when another is not. This is very subjective. You must look at it from the majority of the people’s point of view. What might be wonderful for you may not suit everyone else’s taste. Buyers must also look at it that way. At one point they will be selling and should look at the purchase with resale in mind. Next week I will discuss Home Pricing for Sellers and Offer Pricing for Buyers.