What Determines Market Value? -The Art of Pricing
Deciding a property’s market value is not a precise science. And no one wants to hear that. It’s numbers for Pete’s sake – what’s so mysterious and subjective about that?
Determining a property’s market value though, is no quick math problem. Many factors must be considered. It’s more like… magic. The rabbit-in-a-hat trick can be performed by many a magician, and requires the same basic elements but some pull it off with greater success than others.
How DO we arrive at the Market Price of your property?
I’m about to reveal the inside of the hat from whence market values come. (Forgive me, fellow magicians). The basic elements of this trick are simple: it takes local comparables, general saleability, and a bit of optimism.
Comparables are past listings. This information, accessible only to REALTORS®, reveals what similar properties were listed for and sold for recently, and how long they were on the market. This knowledge gives the agent a good idea of a realistic price range. It is also a fair gauge of how long one can expect a listing to stay on the market.
This has to do with how desirable the property is. Whether or not it has outstanding selling features or a highly desirable location affects value. Recent renovations or upgrades will also factor into market value.
The level of optimism about markets and the property itself does affect market value. Let’s say a realistic price range is $159,900 for a property. Other similar properties have been selling quickly at this price. An optimist might up the price just a little, willing to test the market a bit. Sometimes it pays off, sometimes not.
Each of these basic elements is combined to perform the magical feat of pulling a market value out of a hat. In general, it’s a simple, commonly known trick that doesn’t surprise most people. The real trick is performing it to perfection every time.
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