What Is Market Value?

When you determine market value, you must always remember that you are estimating the market value of one particular house. The location or neighborhood of this particular house is the starting point for your investigation. The exact same house in the next town or even on the other side of the same town, is not relevant to this determination.

For example, a house located in La Jolla, California could be worth half a million dollars. But if the exact same house were located in San Diego (the city next door) it might be worth only $225,000. That's still a hefty price, but it is less than half the price of the La Jolla house.

Although this may seem like an extreme example, house prices throughout the country fluctuate significantly from city to city and from neighborhood to neighborhood. Therefore, whenever you determine the market value of one particular house, you must compare it only with similar houses in the same or nearby neighborhoods.

Current condition

Next, you must assess the current condition of the particular house. The current condition determines the number of buyers who are interested in purchasing the property, which affects the amount of time the house remains for sale on the market before it is sold.

Most home buyers want to buy the prettiest house on the block. Is the house gorgeous and ready to move into? Sometimes some very simple renovations or improvements can greatly enhance your property’s value.

Simply subtracting the amount of estimated fix-up costs from the selling price of other similar houses in the same neighborhood is not an accurate way to determine current market value for a particular house.

Fewer buyers want to buy a house that needs work. When a house attracts fewer buyers, it takes longer for the house to sell. To attract more buyers and sell the house sooner, the price must be reduced by much more than the mere cost of repairs. Consider those improvements or repairs as may be recommended by one of our REALTORS®.

Although the current condition of the house is an essential element of market value, it is almost impossible to determine exactly how much the physical condition of the house affects its value. This is simply not an exact science. As a general rule, you should be fairly safe if you subtract two to three times the amount of the fix-up costs.

The Thirty to Ninety Day Rule

In a normal real estate market, if a house does not sell within one to three months (30 to 90 days), the reason is simple: The price is too high. Even perfect houses do not sell within this time frame if the price is too high. On the other hand, if a house sells within one to two weeks, the asking price may be too low. This is not necessarily the case, however, in the event your home comes on the market at the right price and a buyer has previewed enough properties to determine that your price is fair. A house that sells within one to three months is generally priced at the true market value of the house.

Imagine this scenario. It will take a year to sell a particular house for $300,000, six months to sell it for $270,000 and one week to sell it for $230,000. The price that will get this house sold within one to three months lies somewhere between $250,000 and $255,000. The price that will sell this house in one to three months is probably right around $255,000, its true market value.

Market value is simply the price at which something will sell within a reasonable period of time.

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Moultonboro Office

CENTURY 21 Lakes Region Realty
60 Whittier Highway - Unit 3
Moultonboro, NH 03254
Tel: 603-253-7766
Fax: 603-253-4609

Meredith Office

CENTURY 21 Lakes Region Realty
290 Daniel Webster Highway
Meredith, NH 03253
Tel: 603-279-6000
Fax: 603-279-6116