KAMLOOPS REAL ESTATE
HOME BUYER'S GUIDE: FAIR MARKET VALUE
Whether you're buying or selling a Kamloops home naturally your most important concern is getting the best price. As a seller, you may have lived in your home for several years, contributed thousands to your mortgage, maintained your home for years, and it's only right that you should reap the rewards of your efforts. But as a buyer, you want to ensure you're paying a fair value for a home. How then do you arrive at a fair market value for your home? In this article we will explain how three factors directly influence the real estate market value. Please note that in this article we refer to market value as it applies to a single-family home only. Evaluation methods are different for apartments, condos, and commercial properties.
The term market value is a broad and confusing term. When it comes to determining fair market value on a home, we often say that:
"the market value is the price at which a specific house, in its current condition, will sell within 30 to 90 days."
Market value is limited to your specific house. The location and neighbourhood for your specific home is the starting point for this determination. The exact same house in another city, or another neighbourhood, doesn't matter. Home prices can fluctuate significantly from city to city, and from neighbourhood to neighbourhood. Therefore, when considering the market value of your home, it must be compared to similar homes in the same or adjoining neighbourhoods.
The second factor in determining market value is the condition of your home. Is it in "showing" condition? Does it need some improvements? The condition of your home determines the number of buyers who may want to view and purchase the property which directly relates to the time your home will remain on the market before it sells. Most home buyers want a reasonably-priced home in good condition.
Home buyers may look less favourably on a home that requires major work and as a result they tend to take longer to sell. To attract more buyers, the price may have to be reduced beyond the cost of the repairs. In the end, it's all a matter of how much someone is willing to pay for these repairs. Determining market value of a home that needs some work is not an exact science. Some real estate professionals suggest subtracting approximately two to three times the amount of the fix-up costs.
30 TO 90 DAYS
In most markets a home will sell within 30 to 90 days. If it doesn't, the price is probably too high - even if the home is "perfect". On the opposite end, if a house sells within a short period of time, either the asking price was too low or the market could be hot. If the area is experiencing housing shortages, or there is a fear of rising prices, many homes are purchased within a matter of days of the listing. Ask your REALTOR® what's happening in the market before you buy or sell!
Remember, to determine a home's value most people turn to an appraisal or a comparative market analysis. An appraisal conducted by a certified appraiser is a professional opinion of a property's market value based on recent sales of comparable properties. On average, this type of evaluation costs $300-$500 and most lenders will require it as a part of the mortgage application process. Note that a comparative market analysis performed by a REALTOR® is a free and informal estimate of market value based on sales of comparable properties.