Fair Market Value

The fair market value of a property is defined by the price a specific property should bring in the open market under certain conditions. Both buyer and seller must be informed and knowledgeable about the property and its uses and purposes. Both buyer and seller must act in their own best interests and without pressure to participate in a transaction. Lastly the property must be exposed to the market for enough time to find a willing buyer and to allow for a transaction to take place.

Location, location, location is still the number one determinant of value. From a home’s location within the greater nation to the state to the county to the neighborhood and actual property site, location is critical. Two similar homes on the same street could sell for different prices. One home may back to conservation and a lake while the other has only a stark view of power lines. Astute buyers will compare one property against the other and typically be willing to pay more for the home with the more desirable amenities.

External factors such as water, conservation, power lines, neighboring properties and the proximity to good schools, adequate transportation, convenient shopping, places of worship are all contributing factors to the value a buyer gives to a property. In addition, the current economy and the demographics of the area play a large part in property values. Current mortgage rates and whether it’s a “hot” sellers’ market or a buyers’ market both directly influence what a buyer will pay for a property.

Wondering what does NOT add value to a home? Check out:

1. What you paid for your home
2. What you need from the sale
3. What you want to get
4. What your neighbor says
5. What another agent says, and
6. What it would cost to rebuild today.

One thing to remember is that buyers always determine property values.

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