Many Sellers today have a Perceived Value of what their property is worth. They will value their property based on a recent sale in the neighborhood or a past appraisal that was done when the seller refinanced. A seller will also justify a final value based on location, recent renovations, and additions done to the home.
Absolute Value is what a buyer is willing to pay for a home. A buyer will determine this value by asking a realtor about the sale price of comparable sold properties, as well as comparing the price of similar available properties. Buyers will determine if the home is in “move in” condition or in need of extra work. Buyers are also influenced by location and external factors such as power lines, proximity to other homes, yard size, traffic, and current market conditions.
An appraiser will determine the value of a property through a complex analysis of at least three or more comparable home sales, current available properties, recent renovations and additions, and current market conditions.
Lenders will lend money to a potential buyer based on the buyer’s credit score, financial position, and current employment. Lenders will also use an appraisal to determine the value of a property and will lend money based on a typical 80% loan to value ratio.
If the appraised value of a property is lower than the agreed upon price between the seller and buyer, the lender will ask the buyer for a higher down payment or the seller to reduce their asking price. Most buyers will buy based on their down payment and settlement limit.
As a Realtor, I advise sellers on Current Value based on a similar analysis done by an appraiser. This value will reflect a price that will attract buyers to view the home and result in a timely sale.
You the seller have the final say on what price to list your home. As a “hired” agent I will list your house accordingly. Be aware that pricing your home higher than my analysis can result in little or no showings and a lengthy amount of time on the market. A settlement can also “fall apart” due to a lower appraised value.
Also note, if a home has been on the market for a long length of time, buyers might wonder if something is wrong with the property.
In conclusion, the definition of value can vary. It’s the Absolute Value, or what a buyer is willing to pay that results in a SOLD situation!
Go to www.ralfsells fast.com for more information