Fair Market Value Is What Your Home Is Worth – Today
Understand What Fair Market Value Means To You
Fair Market Value is the answer to the question; “What is my home worth”. Fair market value (FMV) is an estimate of the market value of a home or other property. A homes Fair market value is the amount that a knowledgeable, willing, and unpressured buyer will likely pay to a knowledgeable, willing, and non-pressured seller in the current market conditions.
Fair market value differs from the intrinsic value that a homeowner may place on their home based on their circumstances or desires.
Every rational owner wants the very best home price and terms for their or her home. Several factors, including market conditions and interest rates, will determine exactly what a homes selling price will ultimately be. The idea is to get the highest price and the best terms and conditions during the time period your home is being marketed.
It should be recognized that selling a home isn’t straight forward math. 2 + 2 may not always equal 4 in the real estate market. Each transactions is different. Each seller has different objectives when they want to sell their home. Every buyer has different financial considerations and personal wants that need to be balanced.
What is your home worth? Fair Market Value during the time it is being sold in the then current market conditions!
Every home has a price the home is sold at. However, when it is initially being listing for sale there may be three prices for the home. The price homeowners want, the price a buyer is going to offer and the price a willing buyer and a willing seller agree upon.
In determining a homes fair market value, several factors come into play:
The fair market value of a home is relative to the local market. The same home, in another location, would most likely have a different fair market value.
One of the top factors is the overall economy and the supply and demand for homes.
In a city with a growing population and a limited housing supply, it’s very likely home sale prices will be rising. Known as a sellers market.
If the area is losing jobs and people are moving out, then you’ll likely see home values declining. A buyers market.
Homeowner needs will also have a significant effect on fair market value. If a homeowner “must” sell quickly, they will have little leverage or negotiating power. When a homeowner has no need or incentive to sell quickly, they will have stronger negotiating power.
Homes prices are not based on what owners “needs” out of the sale. An owner may want to sell for $300,000 in order to net $100,000 for their next home purchase. However, the $300,000 price tag needs to be a “reasonable” fair market value in the eyes of the buyer. If similar homes in the local community have been selling for $250,000, the seller may not get what they want unless their home has a greater perceived fair market value.
What other factors will effect a homes fair market value and home sale prices?
A few key factors include the type of home, where it is located, how many homes have sold in the area, home sale prices and when they sold.
For illustration, suppose you might be selling your townhouse. Suppose also that there have been five recent sales of the model you own and that sale values have ranged between $200,000 and $210,000. You and any buyer could probably estimate the price your home would sell at. In a strong market a seller might ask for $210,000 or a bit more. If the market weak, $210,000 may be a reasonable listing price, but the actual fair market value sales price could be lower.
As a second example, consider that you are living in a neighborhood of Victorian-style historic homes, the majority of which were built in the 1920s. Each the homes is different in terms of size, condition, upgrades, details and features. In such a neighborhood, an average home sale price is just a number without much useful meaning. In one block a home may sell for $400,000 and another nearby home listed at more than $1 million.
Understanding what the fair market value is for your home, in your neighborhood, in the current market conditions is key to getting your home sold.
Questions about the Tucson Real Estate Market or Tucson Homes for Sale?
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