How To Calculate The Fair Market Value Of A Property?

Definition of "How to calculate the fair market value of a property?"

Wondering how to calculate the fair market value of a property?

It helps if you understand that it’s all about an estimate; you’ll hardly bull’s-eye-it.

Fair market value is the highest value a home seller and home buyer can agree to in the sale of a property.

So you can read articles about how to calculate the fair market value of a property – like this one – and try to understand the many factors that can influence not only home buyers but also home sellers and kid around trying to calculate it, but the reality is that the only way of finding out the fair market value is after hand are shaken and the deal is through.

Ok, now that we’ve established that calculating the fair market value is a way of having an “idea” more than a concrete fact, let’s take a look at the most important factors when learning how to calculate the fair market value of a property:

  • Market value: how are similar properties doing price-wise? How much are its owners asking and how much is it actually selling for? An appraisal will give you this information.
  • Home seller’s expectation: what does it matter if home buyer’s will pay $300,000 if the home seller will only accept selling the home for over $4,000? Some home sellers have no problem leaving the house on the market until it reaches the point of which they think the house is worth, so any other calculation is useless.
  • Home buyer’s purchase power: like the last one, what does it matter how many rooms the house has and how much similar houses sold in the past if *right now* (for whatever reason) there’s no one with money to spend?

So if you’re wondering why should I use a real estate agent, now you can see why. With all those factors and the variations within them, it’s fundamental that you find an experienced local real estate agent because he or she will know how to calculate the fair market value of a property and guide you throughout the home buying (or selling) process.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Questions

Popular Real Estate Glossary Terms

Not attached to any parcel of land but merely a personal right to use the land of another. ...

Same as term nonconforming use: Property use which is in violation of the current zoning ordinance, but had been in use prior to the zoning ordinance's enactment. A nonconforming use is ...

Contractual agreement between a commercial or industrial rental property owner and an individual or firm who agrees to maintain the property. Management agreements specify the nature of ...

Claim by a real estate broker that his or her actions were the principal cause of the completion of a property sale between two parties. A successful procuring cause claim would entitle a ...

Body o law relating directly to condominiums and cooperative developments. Most property law provides vertical ownership of property in the sense that property owners own mineral rights as ...

Square footage of space a parcel of land has. ...

Primary business district of a city or urbanized area having the areas major governmental offices, professional, and retail businesses represented. ...

The age at which one is legally capable of entering into binding contracts, signing a deed and negotiating business agreements. In most states this is the age of majority. Normally this is ...

Right to enter and start construction or furnishing property that is in the process of being purchased. ...