The New Definition of "Fair Market Value"

Every buyer and seller have a perception of what "fair market value" is...to THEM!  It is usually not the same value, of course.  I was sitting in a training class this week and I started to think about how the current market has changed what fair market value means to me and how it is best explained to my current clients.  This is what I came up with:

FAIR MARKET VALUE IS:

1.  What an able and willing buyer will PAY

2.   What a motivated seller will ACCEPT

3.   What an appraiser can PROVE

 Simple enough, right?  Of course the most important is what the appraiser tells the lender.  There is too much squawking about how much more difficult it has become to get through the appraisal process.  Take a look in the mirror...it is all about managing expectations.

As real estate professionals, I believe that it is our duty to educate our buyers about the current homes on the market AND the ones that recently went sale pending or closed in their neighborhood of choice.

In representing a seller, it is more about setting the expectations for everything from expected market time, condition, pricing, and the level of frustration that they can expect during the process.  Some things are beyond our control, such as the location of the property.  However, by honestly explaining the possible things that might happen during the process, we have limited the frustration and "bad" surprises to our sellers.

Gone are the days where a seller could expect multiple offers the day that the sign went in the yard.  And just because you have not had more than one showing in 30 days does not mean automatically mean that the PRICE is the issue. 

Perfect example of perception of todays' sellers:

If you have a home that is 30 years old and you just replaced the roof, the furnace, the windows, the carpet and the appliances....congratulations. 

YOU JUST DID THE BARE MINIMUM TO SELL YOUR HOME IN THIS MARKET!

In that age of home, it is EXPECTED by today's buyers that these things already be done as part of normal maintenance on a home.  You cannot expect to charge a buyer for the retail of these "upgrades". 

It can difficult for sellers to understand what they can expect to get as far as a return on investment by making these necessary repairs, but you can often know that by replacing them prior to listing the home will sell faster and more money than if you gave the buyer an "allowance" to do them.  First impressions are invaluable and with all the current competition, you need to have everything that can be controlled done already!

In every part of the country, there are still homes selling and some are selling to the first handful of buyers that see them.  That is because they are correctly positioned in the market, meaning they are priced right, staged, ready to move in, no repairs left to do and nicely maintained.  This is true in any market, the prettiest homes sell first!  Be one of those homes and know that you are selling at the fair market value.

Keep smiling!

Karen