What is the difference between FAIR MARKET VALUE & MARKET VALUE when it comes to Real Estate?
What is the difference between FAIR MARKET VALUE & MARKET VALUE when it comes to Real Estate? For Sellers and Buyers these are two very important real estate terms you need to know.
Fair Market Value is the amount for which property would sell in a particular area if you were to put it on the market for sale. Fair Market Value is not to be confused with “Replacement Value,” which is what it would cost an individual to duplicate a property.
Realtors and Real estate appraisers will gather “comparable” sales of properties in a particular market area to determine what the Market Value is. They will look at the differences in quality, size, additions made to the property, school districts, etc. and add or deduct amounts based on their findings. Market Value is the highest price a ready and willing buyer will pay and the lowest price a seller is willing to accept in a scenario where both the buyer and seller are fully informed on a property that has been marketed for a reasonable amount of time.
Whether you are listing your home or purchasing your dream home, always request that your realtor show the best and most recent comparables within your market area. What makes a “comp” a “Good Comp”? Depending on your market area, I like to go back a minimum of 3 months and a maximum of 6 months looking at sales of homes in the neighborhood/zip code that I will be listing or purchasing in. The homes need to be similar in size, features and school districts. The school district, believe it or not can way heavily on a comp. For example, when you have a neighborhood divided by school districts you can have homes selling for $150 sq/ft zoned for one school district and $100 sq/ft zoned for the other, with the homes literally in walking distance of each other.
I’ll wrap up with this. Buying or Selling a home is the largest transaction most of us will ever be a part of . Knowing this, it is imperative to hire the right realtor and real estate company to represent you.
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About Blake Wilcox Properties
Blake Wilcox Properties is a boutique real estate firm servicing The Woodlands, Woodforest and all of Montgomery County. Blake Wilcox is the winner of the 5 Star Realtor Award from Texas Monthly Recently nominated for Best Realtor in The Woodlands and recently named Top Realtor of Woodforest.