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

A company that is terminated within 3 years. According to the tax law, a gain arising from the sale or liquidation of such a business is considered ordinary income to the individual ...

An account into which payment is made for particular expenses to assure that money will be available. An example is a special account the homeowner's attorney establishes for advance ...

Also called functional depreciation. Loss of value that results from improvements that are inadequate, outdated, overly adequate, or improperly designed for today's needs. May be curable or ...

Device that cuts off an electric circuit when the current becomes to strong. ...

Most typically, the definition of real estate spread implies the difference between the price offered by a home buyer and the initial amount asked for by the seller of real property. It ...

Structure built into the water from the land providing a facility for boats to tie up. A dock will often provide utility access ...

Restoring real property to an improved state. The restoration is usually needed because the property's condition has worsened. ...

A method of brick construction where the bricks are laid with their sides facing outward. ...

Return before taxes on the capital invested in real estate property. ...