Are you planning on selling your house? You may be wondering about its worth. But when it comes to knowing the valuation of a property, you can always hear two terms, market appraisal and market value.
Most of the time, homeowners who are planning to sell their properties only look at the market value. However, that’s not only the case. The truth is, you should also consider the market appraisal when looking at the value of your house.
In this article, we’ll discuss market appraisal, market value, and their differences.
What is Market Appraisal?
The market appraisal is the estimated value of your property done by professional real estate agents or licenced appraisers. Its main purpose is to provide the ideal price for the property the owner is planning to sell.
When conducting a market appraisal, there are various factors to consider such as location, size of the property, and current condition. As you know, the more accessible the location is, the easier it is to sell. In terms of the size, the bigger the land area and height of the property, the higher the price. Lastly, if the property is well-maintained or has undergone recent improvements, it can significantly affect the market appraisal price.
Key Aspects of Market Appraisal
1. Professional Opinion
The most important thing about market appraisal is the professional opinion. Although there are factors in considering the estimated value of a property, the last decision is based on the expertise of the appraiser.
A market appraiser has enough knowledge of the things they need to consider to decide on the property’s valuation. In addition, since they’re professionals, they should also assess objectively, regardless of who hired them.
When it comes to availing of market appraisal services, the homeowner has to do so. Usually, lenders require having an appraisal value result first before they allow loans.
2. Current Market Conditions
“What’s the current condition of the market?” It’s just one of the questions a market appraiser asks when conducting the analysis. It usually includes factors like economic conditions, supply, and demand.
3. Comparative Market Analysis (CMA)
Comparative Market Analysis (CMA) is also used in the process of determining market appraisal. It involves comparing the recent sales of similar properties as the baseline for the property up for appraisal.
However, the comparison is made after the analysis of whether the value of the recent sales has been thoroughly examined.
What is Market Value?
Meanwhile, the market value is the actual value of the property placed on the open and competitive market after considering various factors. Usually, the buyer determines the market value by offering the amount they’re willing to pay.
In this case, the buyer is the one who makes the adjustments and may not consider the seller’s listings. This can be regardless of the value determined from the market appraisal. Additionally, the considerations are bigger than a single expert.
Key Aspects of Market Value
1. Objective and Formal Process
Unlike market appraisal which comes from a professional perspective, market value is determined using a more formal and objective process. Additionally, there are guidelines and methodologies to consider to come up with a more accurate value.
2. Legal Implications
Due to its objective process, market value can be used in legal implications such as property tax and mortgage assessments. Additionally, if there are legal proceedings, market value is more likely to be used.
3. Comprehensive Analysis
Similar to market appraisals, factors such as location, recent sales, and cub appeal are also considered. However, these factors are being observed more thoroughly.
Why Understanding the Difference Matters?
Ultimately, the market appraisal value is determined by a professional appraiser, while the market value is determined after considering various bigger factors, including the buyer’s preferences.
Meanwhile, understanding the differences between market value and market appraisal is vital so that you know the things to consider when selling your home. As a seller, you should be aware to prioritise the market appraisal.
1. Making Informed Decisions
Both buyers and sellers can benefit from knowing the difference between market appraisal and market value to make informed decisions. The seller can benefit from this in finalising the listing price of the property. On the other hand, buyers will be able to decide whether the listing price is fair enough.
2. Better Negotiation Strategies
Once buyers and sellers see the asking price and finalise the listing accordingly, they can negotiate more effectively.
3. Considering Legal Implications
Understanding both terms can be helpful in terms of legal processes. If there are tax assessments or property disputes, you can present the market value of your property for a clearer discussion.
Final Thoughts
The world of real estate can be complicated. Whether you’re a seller or a buyer, you should be aware of the differences between market appraisal and market value as it can help you negotiate properly and make the right decisions.