How To Calculate The Fair Market Value Of A Property?

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

Claudie  Telcy real estate agent

Written by

Claudie Telcyelite badge icon


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

Barrel, reservoir, or tank for storing rain runoff. ...

Condensed appraisal report covering the major items. ...

Same as term graduated lease: A rental stipulation a varying rental rate. Rental rate are determined tied to periodic appraisals or an inflation or an inflation index. The provision is more ...

Listing of the names of tenants, apartments, or office numbers, and monthly rentals. ...

Rezoning of land from a higher density use to a lower density use. ...

(1) Wide boards, generally two inches thick, attached to flooring or roof of a structure. (2) Light gauged ribbed metal sheets used for supporting a roof or floor. ...

Depressed or raised framed in portion of a wall, ceiling, or door. A panel board pattern is decorative and gives the effect of a series of highlighted squares or rectangular pieces. ...

The term accusation refers to a declaration made by an individual about another individual or entity having behaved in an immoral, improper, or wrong manner. The two parts of an accusation ...

Danger, hazard, risk, or peril. For example, jeopardizing a piece of property by pledging it as collateral for a loan. ...