Market Price vs Market Value are actually two different things. There can be lot of misunderstandings about the two so we are going to take a look at the definitions of each and how they affect home buyers and sellers in the real estate market.
Let’s get started!
What is Market Price?
Market Price is what a ready, willing and able buyer will pay for a home AND what a ready willing and able seller will accept for the home when on the open market. Keep in mind, neither party should be under pressure or duress, either.
Market Price reflects what properties have actually sold for – the transaction has closed.
Price is determined by local market conditions including supply and demand, the home’s condition and what other like homes have SOLD for in the hyper-local area.
Buying and selling homes is an emotional process but understanding some of the key elements makes a person feel better! The difference between price and value is definitely a key element, so let’s keep going.
What is Market Value?
Contrarily to Market Price, Market Value is much more subjective. It’s something that most people determine based on the value the home offers them, personally.
Homes that appeal (contain value) to a large sector of the home buyer population can create demand which, in turn, can influence price. But, without demand, value doesn’t usually affect the price.
The Market Value of a home can be very different for a seller and a buyer and even change from buyer to buyer. It’s the portion of the home buying equation that is emotional and very personal.
For instance, a seller may see a brand new roof as a lot of value in their home and want to price it higher. However, a buyer may see a roof as a necessary component of the home they are going to purchase and not give it a dollar for dollar return on the seller’s investment.
More Examples
Another example is a pool. While a seller might consider his pool as an extra benefit or value, certain buyers may look at them as high maintenance and costly.
Keep in mind, in addition to the “value” created in a buyer’s mind, you have to have some concrete proof that your home is worth what you are asking. If the buyer is getting a mortgage loan, an appraiser will look at market conditions, comparable homes that have sold and the condition of your home to make his/her determination of value.
See? Market Value is very subjective. Value is truly in the eyes of the beholder.
Bottom Line with Value vs Price
Comparatively, Market Price & Market Value can be different but they can also be the same. It depends on the home, condition and how much it appeals (adds value) to a prospective buyer and their lifestyle. It’s a marriage of logic and emotion.
As a REALTOR, it’s my experience in the hyper-local market that can help me marry both the price and the value so my sellers get the most for the home in a short amount of time. Overpriced homes sell for less in the long run – period.
I do this by creating a CMA (Comparable Market Analysis). The CMA shows me what homes have sold for in the immediate past to give us an educated idea of Market Price.
Additionally, it shows me what homes are currently pending and active on the market to try and get an idea of what the market is telling us as far as Market Value is concerned. It’s quite the dance but when executed well, it results in a happy seller and a happy buyer. I like happy people!
Do This…
I would be happy to meet you, tour your home and complete a FREE CMA Report for you if you are thinking of selling or just want an idea of what your home is worth in the current Central Indiana Real Estate Market.
Please fill out this form and let’s see what your home is worth! https://mygpsrealestate.kw.com/whats-my-home-worth
Bottom line? We’ll work together to prepare your home for sale and find that price that makes you happy and shows value to the biggest part of the buyers pool!
Remember, pricing your home to match the condition is KEY!
Want more FREE help about how to Prepare Your Home to Sell? Go here and pick up a copy of my eBook:
