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.
Popular Real Estate Questions
Popular Real Estate Glossary Terms
Zoning a portion of land in a given area for different purposes than its surrounding functions. For example, a locality may decide to spot zone a vacant lot in a residential area for ...
Stiff pipe used to cover electrical wiring for safety purposes. ...
Geographic area that is attractive to prospective tenants. Square footage in an office building or apartment house that may be rented by a tenant. ...
Features a home buyer orders from a custom builder or developer when purchasing a home. For example, a customer may order a two-car garage when buying a home requiring an additional charge. ...
Window having both screens and storm windows that can be easily interchanged according to seasonal needs. ...
Right of property owner to have his or her property used in satisfying a loan. Written contract of court judgment placing a lien on a parcel of property as collateral for a loan. An ...
Period of time between valuations of property for tax purposes in a given locality. ...
Real rate of interest on a loan. It is the coupon rate divided by the net proceeds of the loan. Assume Sharon took out a $1,000,000, on year, 10% discounted loan to buy real estate. The ...
The definition of an absentee owner is a property owner who does not reside on the property. An absentee can be an individual or a corporation with legal ownership over a property ...
Have a question or comment?
We're here to help.