involve repairs and staging to maximize value.
Many factors go into setting a listing price, making it critical for home sellers to understand what determines their home’s value. There is both an art and a science to pricing a home. It is not a simple formula or mathematical calculation. The decision is influenced by factors such as location (even differences on the same street), condition, features, and unique amenities. A calculated home value may not align with what a seller believes their home is worth. Recognizing this helps avoid overpricing, which can leave homes sitting on the market unsold.
MARKET, APPRAISAL, AND ASSESSED VALUES
The listing price is ultimately the seller’s decision, but a savvy seller will consult a real estate professional to make an informed choice. Understanding the differences between market value, appraisal value, and assessed value allows sellers to engage meaningfully in pricing discussions. Market value is the estimated price a property should bring in a competitive, open market under fair conditions. This is an opinion of what a house is expected to sell for in its local market, based on comparable properties. Appraisal value is an evaluation of a property’s worth at a given time, conducted by a professional appraiser. It plays a key role in loan underwriting, determining the amount a buyer can borrow and under what terms. For example, the loan-to-value (LTV) ratio is based on the appraised value, and if the LTV exceeds 80%, the lender typically requires mortgage insurance.
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