Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [March 2006]
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Understanding How Fair Market Value is Determined
Whether you’re a buyer or a seller, knowing the fair market value of a home is important. It can make the difference between a quick sale or having your house languish on the market for months. If you are a buyer, knowing the fair market value of a home gives you confidence in the negotiation process.
But what is the fair market value of a property, and how is it determined? Market value is defined as “the most probable price a property should bring if payment is made in cash and the buyer and seller are unrelated, well informed, and acting without pressure.” The value is determined by comparing the home you are selling or buying to other similar homes that have sold recently in the same neighborhood. This comparison, called a CMA or Comparative Market Analysis, compares a number of variables such as the number of bed and bathrooms, square footage, age of the home, and size of the lot. It also considers the price per square foot that the homes have sold for.
But even with these figures, setting the fair market value is an art and not a science. You can use all the numbers you like, but each house is a unique property at that moment and time. No two properties are exactly alike so your Realtor’s knowledge, along with the CMA, plays a part in the process.
Just as each property is unique, so are the buyers and sellers. Emotions, desire, and the necessity to buy or sell all play a part in the negotiation process even when the fair market value is known by both parties. This is where a good Realtor® — one who has knowledge and experience in the market and in dealing with people — can help both parties reach an agreement.
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“Mary Monday made the experience of selling my home a genuine pleasure. It delights me to know there are true professionals left in the world.”—BS |
