Market price is what a willing, ready and bank-qualified buyer will pay for a property and what the seller will accept for it (McTague). Variables such as supply and demand, condition of your home, and what similar properties in the same condition have sold for all impact market price. Buyers and sellers can view value differently. A seller might feel that their in-ground pool is a benefit, but the buyer could see it as a negative and place less value on the property. Or the seller could feel the new roof they put on the house has great value; however, the buyer places no value on this because they expect the property to have a roof in good condition. Price levels the playing field. I work with many buyers who might dislike a particular feature of a property but will overlook that “negative” feature if the price is right.

The sales comparison approach is the most frequently used method for determining the value of residential real estate. Using this approach, the property’s value is based on what similar properties have sold for recently in the same market. These properties are called “comparables” or “comps”. For example, let’s say the average price/ sq ft for 12 homes over the last 6 months in a subdivision with 2,000 – 3,000 sq ft averages $125/sq ft. If your home has 2,500 sq ft, the average market value based on sq ft alone would be $312,500.

Another tool used to support market value is an automated valuation model (AVM). An AVM uses mathematical modelling combined with a database to analyze values of comparable properties. There are many sites that provide AVMs. For example, Zillow’s “Zestimate” is a standard AVM. A standard AVM is accurate within + or – ten percent 85% of the time.

I personally use Realtor Property Resources (RPR) which provides a standard AVM combined with a 1 to 5 star confidence level rating. The 1 to 5 star confidence rating provides a more accurate market value estimate than an AVM alone. These two resources together provide data to support the price point for listing your home.

If you would like to have a free market analysis of your home, please contact me at (601) 421-7094 or dnelson@rightsizerealty.com.

References:
McTague, R. (March 26, 2015). The Difference Between Market Price and Market Value in Real Estate. Inman Retrieved from: https://www.inman.com/2015/03/26/the-difference-between-market-price-and-market-value-in-real-estate/