Value is based on objective and subjective factors. A home installed with Travertine flooring throughout would have a greater objective value than would a home with concrete floors. Subjective value, on the other hand is affected by the relative work an individual places on a specific item, although a beautifully designed and constructed home with expensive materials still may have no value to someone who does not want such a home.
Real Estate may have many different kinds of value at the same time, for example, market value, appraised and taxable values, insured value, mortgage value, and depreciated value. Often value is not the same as price, nor is it the same as cost.
Price is the amount of money that is ultimately paid for a property
Cost is the capital outlay for land, labor, material, and profits necessary to bring a property into existence.
Appraiser use comps (comparable market sales) of local properties sold within the last six months to value your home. With today’s rapidly rising seller’s market, six months old information is ancient history in some neighborhood communities. Appraised value does not always equal the true market value, or what the home will sell for on the open market.
REALTOR'S give a comparative market analysis, an informal estimate of market value based on comparable sales. Lenders on the other hand will use the appraised value to determine a new mortgage amount.
Market Value this is the price that buyers looking at a home are willing to pay for it, market value is not an exact science, but an introduced concept from individuals and companies (real estate brokers/agents) as a business tool. Value is subject to Sellers and Buyers perception and interpretation of parameters that they decide to take into consideration.
Market value can take into account factors that are completely out of the Sellers control, good vibe and bad vibes; a couple walks into the home and it reminds them of their very first home which might make the home worth more (good vibe), however the same couple could have a different feeling like the home is haunted (bad vibe) and this would cause a Buyer not to buy.
Appraised Value is basically what the bank thinks a home is worth. This can include everything from what neighborhood the house is in to how many fixtures there are in the kitchen. The appraised value tends to be unbiased, because the bank isn’t looking to bargain with anyone. They need an accurate assessment.
It is very rare that appraised value of a home is the same as market value.
(Let's recap) - Appraised Value of a home is determined in order to justify the rate of the mortgage loan. This price is based on historical data and previous sales comparisons. That means sales of similar homes in the past six months. Some problems may be encountered if there is a large gap between the appraised value of the home and purchase price being offered.
Market Value is based on a informal estimate based on comparable's in subject homes neighborhood.
Author:Louis Williams Phone: 985-237-0712 Dated: March 8th 2013 Views: 820 About Louis: As the CEO for The Williams Team, it is my mission to see that your Real Estate Transaction meets an...
Louis Williams is the CEO for The Williams Team which now has 14 members total. His Team consists of four Listing Specialist, five Buyer Specialists, two Transaction Coordinators, Director of Sales, Listing Manager and Listing Assistant. The Williams Team has had nearly 100 Million Dollars in gross sales over the past nine years. Louis' Real Estate Group is among the top 1/2% of Realtors in the Greater New Orleans Area. He has also been awarded the prestigious NABOR Platinum Award for the top 1/2% of Realtors for the past five years and named the #1 Real Estate Group in the Area 2014.
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