There always seems to be confusion in the marketplace about real estate “values�. We frequently hear about market values, tax values and appraisal values. It is important to understand what these values really mean and how to use them. Let me first say, the most important value is what the property will sell for on the open market. Don’t ever forget that. Listings that say “property listed $30,000 below appraisal� or “property listed 20% below tax value� mean absolutely nothing. It may sound attractive if a property is listed $30,000 below appraisal value, but if that is still $10,000 more than what it would sell for (market value) it’s still priced too high.
Oftentimes appraisal values and tax values don’t even come close to reflecting market value or what a property would sell for on the open market. I’ve been in markets where these values are $100,000 different than real market value.
What is comes down to, is researching what properties are actually selling for on the open market and using those values as your sales comparables or your comps. That is the best starting point in doing your market research. If other comparable properties are selling for $150,000 than your property will probably sell for roughly the same amount.
Don’t make the mistake of falling for creative marketing techniques about properties selling at a discount to appraisal or tax values. Do your homework, find out what properties are truly worth and you’ll make sound purchase and sales decisions.
Posted by Carter Brown
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