The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
Market Value…
What is Market Value? Market Value is the price that it is reasonable to expect a home to sell to a willing and able buyer marketed by a willing seller not under duress. Market Value is based on Past Sales, Property Condition, Trends, and of course… What a Buyer is willing to pay.
What Market Value is not: Market Value s not the price that homes are listed at. There are many homes listed at values above market value that never sell, so Market Value cannot be determined by what homes have been or are currently listed.
Property values are impacted by three major factors: Recent Sales (generally within the last 6 months at a distance no greater than 1 mile), Property Condition, and the inventory level of homes in the micro-market, in this case the Trussville Market.
There are currently 287 homes for sell in the Trussville Market. Defined as Trussville School Zone. The current absorption rate (the average number of homes sold per month for the past six months) is 19 homes per month (112 sales in the last 6 months) yielding an inventory level of just over 15 months. A Seller’s Market is defined as a market with less than 5 months inventory. A normal market is defined as between 5 and 7 months inventory. Anything above a seven (7) month inventory is defined a Buyer’s Market. While the Trussville Market is much stronger than many of its surrounding markets, Trussville is currently experiencing a strong Buyer’s Market.
But my Tax Assessment shows a greater value than this! Tax Valuations will always lag market values. In an appreciating market (prices are rising) the Tax Valuation will be lower than the Market Value. However, in a depreciating market (prices are falling) the Tax Valuation will be higher than the Market Value. So the Tax Valuation is always at least one year old or in other words what your property used to be worth… Not today’s value.
But I owe more than that! / I have more than that invested! Market Value is not impacted by what you owe on the property or what you have invested in the property. Buyers are very good at determining what Market Value is… they are out there comparing what is on the market. If there is a surplus of inventory from which to pick, you are in a competitive market… You are competing against all the other homes out there in your price range. Price it too high and you help others sell their homes before you sell yours, if you sell it at all. Remember in today’s market and based on current trends, it is worth more today than it will be in tomorrow’s market.
May the market be with you.
