How To Calculate The Fair Market Value Of A Property?

Definition of "How to calculate the fair market value of a property?"

Wondering how to calculate the fair market value of a property?

It helps if you understand that it’s all about an estimate; you’ll hardly bull’s-eye-it.

Fair market value is the highest value a home seller and home buyer can agree to in the sale of a property.

So you can read articles about how to calculate the fair market value of a property – like this one – and try to understand the many factors that can influence not only home buyers but also home sellers and kid around trying to calculate it, but the reality is that the only way of finding out the fair market value is after hand are shaken and the deal is through.

Ok, now that we’ve established that calculating the fair market value is a way of having an “idea” more than a concrete fact, let’s take a look at the most important factors when learning how to calculate the fair market value of a property:

  • Market value: how are similar properties doing price-wise? How much are its owners asking and how much is it actually selling for? An appraisal will give you this information.
  • Home seller’s expectation: what does it matter if home buyer’s will pay $300,000 if the home seller will only accept selling the home for over $4,000? Some home sellers have no problem leaving the house on the market until it reaches the point of which they think the house is worth, so any other calculation is useless.
  • Home buyer’s purchase power: like the last one, what does it matter how many rooms the house has and how much similar houses sold in the past if *right now* (for whatever reason) there’s no one with money to spend?

So if you’re wondering why should I use a real estate agent, now you can see why. With all those factors and the variations within them, it’s fundamental that you find an experienced local real estate agent because he or she will know how to calculate the fair market value of a property and guide you throughout the home buying (or selling) process.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Questions

Popular Real Estate Glossary Terms

Active photoelectric cell made of silicon and activated by electromagnetic energy in the form of light waves. They are now used in a wide range of electronic systems including ...

Form of lighting designed to have 90% to 100% of the emitted light directed upward so the principal illumination is reflected rather than direct. Indirect lighting is designed to have less ...

Pipe fitting shaped like the letter U permitting an intersecting pipe to be directed around another pipe. Plumbing connection between two water pipes in the same system. Passageway ...

A partition or wall that provides no support to the structure in which it is located. For example, a nonbearing partition or wall does not support any floors above it. A partition which ...

Work required as a court judgment because of a crime committed. ...

Agreement in which the contract price to build something is equal to the total costs incurred plus a predetermined profit. The profit may be based on a percentage of cost (e.g., 20% of ...

Clause in a percentage lease permitting the landlord to cancel a lease and recover the property if the tenant's sales fall below a specified level. Clause in a lease permitting the ...

Under law, a warranty in effect even if not expressly stated. It provides that real property sold is warranted to be appropriate for sale and is in proper condition even if not stated, ...

Measures looking at the past, current a future direction of the economy. They may have an impact on the real estate market. Each month government bodies, including the Federal Reserve ...