The market value of a property, also known as its fair market value, is the result of a professional valuation. The market value is therefore the calculated price at which a property can most likely be sold.
It is typically used as the asking price in real estate advertisements and brochures. A surcharge of around ten percent can often be added to allow for negotiation. Even if you plan to sell your property yourself, you should base your asking price on this market value.
However, there are exceptions. In rural and structurally weak areas with a high supply of real estate and low demand, you should consider offering your property below market value.
Conversely, in densely populated areas with high demand for real estate, prospective buyers often outbid each other for the property's market value. It's possible that several people will be determined to own the property and offer you, as the seller or the real estate agent, a sum far exceeding the market value. There's nothing inherently wrong with this, and you can expect a higher sale price.
A problem can arise, however, if the highest bidder's bank rejects the mortgage. This is because banks only grant loans based on the market value. For properties sold at an inflated price, the buyer must cover the difference from their own savings. Therefore, if such a bidding war ensues, you should verify with each bidder that they can actually finance their dream property. You should request to see a preliminary financing commitment from the prospective buyer, as well as bank statements that demonstrate the amount of their available funds.
Do you want to determine the market value of your property or need help with the sale? Contact us now.
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