What is Fair Market Value in Real Estate?

What is a fair market value of a home in
real estate? How is a home market value determined? I’m Alfredo a realtor with
Houston Katy Homes Group, Ameri Choice Realty, if you’re new here please
consider subscribing and hitting the notification bell so you can get
informed about our new videos. We talk about all things real estate in the
Greater Houston area. In this video I’d like to talk to you about this term ‘fair
market value’ in real estate. What is ‘fair market value’ and what are some of the
determining factors? There are a number of determining factors when it comes to
fair market value, but in a nutshell a home’s market value is determined by
what the market is willing to pay at any given time, what the market considers
fair. One of the first determining factors is local market activity. Are you
in a buyer or a seller’s market? This will have a real impact on the market
price you can get for your home and how quickly you can get it sold. A lot also
depends on the price of comparable homes that have sold in your neighborhood and
local area. The location of your home will also affect its market value. What
is happening in your neighborhood? Are you in a good school district? Are you in
close proximity to commuter routes? What amenities are available in that
community for buyers, such as nice parks, playgrounds, shops, restaurants, is the
maintenance of the neighborhood going up or down? Are there any plans for
development in the area? What are the crime statistics like? Is there an active
homeowners association that insists on certain standards? Is your neighborhood
one in which the neighbors may not be too concerned about the appearance of
their homes or are they taking care of their gardens? All of these factors can
impact the market value of a home. What is the condition of your home like? Both
structurally and aesthetically? What is the square footage, the condition of the
air conditioning or the heating, the condition of the roof, appliances,
the layout and general appearance. All of these things factor into the market
value of your home. What does not factor in, is the price
that you paid say seven years ago or how you spent to upgrade and remodel it,
because some upgrades help and others don’t. The market may have gone up or down since
then due to factors beyond your control like the economy, jobs in your area,
natural disasters and more. You may also have spent $30,000 on an
addition to your home but that extra $30,000 may not be redeemable
when it comes time to sell, an example is a pool which will only add $10,000
in value. These factors unfortunately will not have a big impact on the market
value of your home. So again a home’s market value is determined by what the
market is willing to pay when you’re ready to sell, what the market considers
fair, and all of the factors I mentioned come into play in determining that fair
market value. I hope you find this helpful, I’m Alfredo with Houston Katy Homes Group, if you would like to see my videos
on strategic home pricing go to my youtube channel where I have a full
playlist for home sellers. Click on the link attached to this video! Till next
time, All the best!

6 Replies to “What is Fair Market Value in Real Estate?

  1. Such a great question to address! So many interpretations but you really hit it on the head!

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