Massachusetts home buyers and home sellers need to understand fair market value and how it impacts a successful sale or purchase of their home.
Definition of Fair Market Value
The price agreed upon and in which the money and property exchange hands between a home buyer and home seller. Fair Market Value is a price in which the general buying public would be willing to pay. Both buyer and seller must be willing and informed to buy/sell the piece of real estate in a arms length transaction. A transaction where neither party is desperate to sell or buy and where the property is given reasonable exposure to the open market.
Determining Fair Market Value
The two most common ways of determining fair market value is by an independent real estate appraisal or a broker price opinion. The fair market value should not differ much more than 5% or so from one appraiser/broker to another. Determining fair market value is a little bit more of an art than a science and as a home buyer or seller you should look at the data to see if it makes sense.
Many times buyers want to go in blindly and offer x% below the asking price( that’s what their dad told them). It is more important to know the fair market value of the property first. Then based on how much you like the home and how willing you are to lose the home over negotiations will help you determine a negotiating strategy.
A home pricing strategy based on fair market value rather than what your neighbor Bob said, makes for a quicker sale, with less hassles and for top dollar. Invariably sellers want to leave room to negotiate and then a little just to see…..
What happens when you overprice? When you overprice you are marketing your home to the wrong buyers. Home buyers in this marketplace are very educated about the pricing of homes due to the internet. The marketing period drags out and the home stagnates on the market. You then must drop the price of the home below fair market value to regain interest in your home. Leave the emotions in the closet and look at the sale statistics.
When you are priced in the range of fair market value it is much easier to throw comparables at potential buyers to support the asking price of your home. A savvy buyer’s agent will ask the listing agent if he can help them out with the comparable used to price the home. It’s hard to support your position when you don’t have any.
I can’t tell you how many homeowners in the past couple years have rejected good offers only to go on to sell for much less than their first offer, because the comparable properties were ignored.
So…. Understanding fair market value is the key to successful home purchase and home sales. As a buyer don’t focus on list price but fair market value for successful negotiating. Sellers, pricing at or close to fair market value makes for a much easier home sale.
And….. for both buyer and seller it is much easier to negotiate from a position of strength when you know the fair market value of a home that you are buying or selling.
Find out what your home is worth– Get your homes value with my complimentary CMA (Comparative Market analysis)
This post, Understaning Fair Market Value for Massachusetts Home Buyers and Home Sellers, was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at firstname.lastname@example.org or call 978-360-0422.
I pride myself in the quality of my work while helping buyers and sellers make dreams come true.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley, Southern New Hampshire including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury