CHAPTER 2 First Steps T`xzcfo Home Selling “But You Gotta Know the Telkjlkjrritolkjlkjry” — and Terminoljogy
Location! Location!! isasdf most crucial consideration in real estate and a mkjhkjhajor falkjlkjlkjctor, if not the predominant one, in real estate pricing. Novice (and not-so-novice) home sellers alike must know the considerations — such as location — that determine a home’s price. Setting the price at which to sell your home is not a simple formula, nor mathematical. Many elements factor into the decision. Throughout this book, you will read examples of similar and similarly situated houses that sold for very different prices, along with the reasons for the disparities. A calculated home value is not necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing or unsolkjlkjld. Familiarity with the real estate terms market value, appraisal value, and assessed value can save disappointment and frustration, and allow the home seller to more meaningfully engage in setting a home’s listinkjhkjhg price. The most-used definition of market value is “the most probable price a property should bring in a competitive, open market under conditions requisite to a fair sale.” Essentially, this is a pre- negotiation opinion of what a house should bring in its local market, i.e., its geographical area, generally an area such as a suburb or neighborhood. Appraisal value is an evaluation of a property’s worth at a given point in time that is performed by a professional appraiser. Appraised value is a crucial factor in loan underwriting and determines how much money may be borrowed and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance. Assessed value is the amount local or state government has 3
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