Mark-to-Market

What determines the market value of property? Think about what the term market value means... Market value is the highest amount that someone in an open market is willing to pay for something.

That's why today's real estate market is very tough for sellers. Many fail to realize that market value is not determined by how much was originally paid for the property, or by how much the property's value "should have" increased since you bought it. A property's market value is equal only to what the market is willing to pay for the property NOW. This is dependent on a number of factors, specifically factors related to the economy. When unemployment is increasing, credit (lending) is tightening, the dollar's value is falling, people are losing equity in other investments, and cost of living is still rising... the market value of a given property will decrease. Why? Because in a market like that, people have less buying power and tighter budgets. Unfortunately this is the case today.

The best way to determine the market value of your property is to get as many potential buyers in for showings as possible. The more people that see it, the more opportunities you have to receive offers.

Of course, before you get showings on your property you have to decide on a listing price. Sounds like a catch-22, right? Not really. Your realtor should be familiar enough with the market to know what properties similar to yours have been selling for in recent months. This is why it is very important you sit down with your realtor and have them do a comparable market analysis (CMA) for you before listing your property for sale.

I'd rather have a seller price their property lower and leave minimal negotiation room, than price the property too high (to leave room for negotiation) and not get any showings. With as much housing inventory as there is right now, people do not have the time to see everything. So they'll start from the lowest priced properties and work their way up. Don't let your property be the last on the list for viewing!

I'd also rather see a seller get 5 low offers that they have to turn down and finally get one good offer, than not get any offers at all because the property was priced too high to attract showings.

My point? Price your property reasonably and you may even end up with a better offer than if you'd priced it too high!