Definition of True Market Value

House

When you are considering buying or selling a home, it is important to learn the property's true market value. This value provides a realistic guideline for what you can expect to receive or pay in the transaction. Although this figure is helpful, many factors contribute to its calculation, and ultimately the final selling price is determined by what you or someone else is willing to pay.

Definition

True market value is the price that a seller of a property in its current condition can expect to receive in a reasonable period of time. Reasonable generally refers to the next 30 to 90 days. This value helps to determine an asking price for a home, as well as how much someone may want to offer for one.

Appraisal

A certified real estate agent or professional home appraiser is the person who determines a property's true market value. Typically an appraiser will take a wide variety of information into account, gathered both from a physical home inspection and other raw real estate data in the area. After all of the information is taken into account, an appraiser comes up with an educated guess as to what the property will sell for. This guess is the true market value.

Comparisons

One main guideline that appraisers utilize to determine true market value are comparisons of other homes in the area. By locating records of homes that have sold recently that are of similar size and features, an appraiser can create a base price for a home which can then be adjusted accordingly following more specific observations. Records deal only with homes sold in very close proximity to the property being appraised, as similar homes even in neighboring cities often reflect vastly different market values.

Specifics

The base price acquired from looking at comparable properties is further adjusted based on specific home traits such as overall condition and major improvements. It's understood that if the inside of the home is in bad condition it could negatively affect the value. The primary improvements on the inside of a home that help to increase a property's value are those done to the kitchen and bathrooms. On the structure itself, a new roof, windows and doors all can increase a home's true market value. Other inside cosmetic features, such as new paint or carpet, usually do not aid in adjusting market value.

Guideline

True market value is only a guideline to be used to determine where to start with a property listing or offer. This value assumes the property will be sold within a reasonable time of 30 to 90 days. This takes into account a medium value in comparison to the higher price a home could command over a longer time, and the quick selling ability of a cheap price. Ultimately, no matter what appraisal value is given to a home, you can't force a person to agree with it; someone still must be willing to pay that price.

References

• CRE Online: What Is Market Value?