I recently posted a blog on Tips for Securing an Accurate Appraisal. It brought to mind the different aspects of pricing in real estate. It is one of the most important aspects when buying or selling a home in any market. Keep in mind, in Northern Virginia, there are always people willing to buy and sell in any environment. It is critical to analyze various aspects that determine the true market value but ultimate determination is what a buyer is willing to pay and at a price the seller is willing to sell. Listed below are a few points variations of value.
-Appraised value: this is the most subjective piece of the puzzle today with the implementation of the Home Valuation Code of Conduct. It has taken what was once and almost a given to a tougher process to achieve “market value”. As a “value add” part of listing process to our listing clients to help them achieve our sales price, we always meet the appraisers at the property to help support the value or sales price. We include floor plans, surveys, comparable sales, market data and trends as well as statistics on the area that will help in the process of determining the property’s value.
-Market Value – the truest form of value – what the buyer is willing to pay and the seller is willing to sell the property for under current market conditions. Market value is determined by a particular purchaser’s and seller’s research of the market, market trends and data available at the time of the offering. This is the value we hope to attain through the appraisal process once a contract is ratified.
-Tax Value – what the local governmental agency sets as their valuation for tax generation purposes. These values are determined by market conditions and perceived value based upon an assessor’s opinion of what is happening in the marketplace and to raise funds in the appropriate jurisdiction. These valuation occur on a regular basis from once a year to once every 5 years depending on the area.
-Perceived Value – This is the value a seller has in mind for selling their property for – it may be low, but often times it is high. This value can come from past sales, perceived values of improvements made to the property or lack of improvements made that are necessary to achieve the value they perceive. Additionally, this opinion can come from family, friends or neighbors and what they believe the seller could obtain in a sale. On the flip side, it can be a purchase’s perceived value and their attempt to “steal” a house. This value typically holds the least weight. This value is also the hardest to overcome for a Realtor in many cases.
-Agent/Realtor Value – this value comes from market knowledge, market trends, analysis of demand in the price point, and in depth analysis of square footage prices, tax assessed value to net sales price ratios, and sales prices of comparable properties that have settled within the previous 90 days. An experienced Realtor can be your most valuable asset in determining the right value for the house being considered. If you have the right Realtor on your team – they are an invaluable asset.
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