What is market value? Market value is the price the market will pay for any product, good, or service. In its most basic form it is driven by supply and demand. The less the supply and the more demand for the product, the higher the price. Nothing new there. However, in real estate sales buyers look for assurances that something they are buying is worth what they’re paying for it and sellers always think they’re undercutting themselves and hope they can find some clarity as well.
I’m here to inform you… The market sets the price. Not the assessed value on the tax rolls, and not someone sitting behind a computer desk looking at homes that have sold in the last year within a 1 mile radius.
First of all assessments in themselves aren’t the full value of a house according to the town in the first place. They take the assessed value and apply an equalization rate that increases the assessed value to the “Full Tax Value”. As a buyer when you ask for the assessed value you’re asking for bad information to begin with. Don’t do that to yourself.
Why assessments are bad for judging value: It’s quite simple, depending on the area the home is in it may have not been reassessed for 5 years or more. How is that going to provide a buyer with any useful information? Don’t use assessments to judge value.
Appraisals are unfortunately a necessary evil in the real estate world. The banks require them and you can’t get a mortgage without one. However, I’ve experienced multiple situations where sellers who have refinanced their home think that the appraisal that was done is actually a real value. The fact is that refinance appraisals are not as stringent as resale appraisals and will generally be a higher value than their counterpart. Just because an appraiser says something is worth an amount doesn’t actually mean that’s what you’ll receive for it.
The market always determines the price of a home. There are 3 easy ways to know how your pricing is working in the market. (This assumes you have a reasonable level of marketing occurring.) 1. You have no activity. There’s a good chance this means that the market is rejecting your price. They completely think you’re out of whack for what’s going on in the market. 2. You have some showings but no offers or real interest. This means that you are close on price for what you are offering to the market. 3. You get offers or even multiple offers on the home. Now you know you are priced in the right range because you’re selling it!
The “Full Tax Value” and appraisals can be used as data points for determining what a good offer price for a home is, but what one appraiser, or the town, says for a value of a home does not represent how the market feels about a property. Your home is worth whatever someone will pay for it, not a dime more or less. If you under price your home, the market will drive it up by giving you multiple offers to choose from. If it is too high, the market won’t come knocking. The way you find out your home’s value is to have Inglenook Realty Inc. list it on the market so you get the best in marketing, photography, and video. With good marketing you are more likely to find a higher value as your market value.
Adam Pandori is an original Realtor of Inglenook Realty Inc. established in 2005. He is a multi-million dollar selling agent as well as one of the in-house photographers for the company. You can reach him directly at (518)528-3654 or at [email protected]