Back in the old days determining the market value of real estate was a fairly straight forward process. An agent would obtain sales records from comparable properties for the past few months and with input from the property owner a value would be determined.
In today's market the concept remains the same, however there are some new considerations that must be taken into account. First and foremost is the number of foreclosure and short sales that have occurred in a market area. When these sales are factored into a comparative market analysis (CMA) the result is often a shock to prospective sellers.
This is the situation that has put buyers in the driver seat in our current market. But whether you're a buyer or a seller, knowing the fair market value of a home is important. It can make the difference between a quick sale or having a home languish on the market for months or even years. If you are a buyer, knowing the comparable sales in a market area gives you confidence in the negotiation process. If you are a seller as distasteful as it may be, you must consider the effects of foreclosures and short sales on the value of your property.
Market value is defined as; "The most probable price a property should bring if payment is made in cash and the buyer and seller are unrelated, well informed and acting without pressure". Just as each property is unique, so are buyers and sellers. Emotions, desire, and the necessity to buy or sell all play a part in the negotiation process even when the market value is known by both parties. Even with all of the comparable sales information from a CMA, arriving at a fair market value is an art and not a science. All the numbers and data considered; each house is a unique property at that moment and time.
A professional Realtor, with knowledge and experience in the market and in dealing with people, can help both parties reach an agreement on the value of a property. When all is said and done the true value of a property is the amount paid at the time of closing.