Facebook
X
Pinterest
Copy Link
When selling a Southern California home, you need to come up with a list price. After all, list your home at too high of a price and it may sit on the market for a while. Price it too low and you leave money on the table that should have ended up in your pocket. It helps if you know what the fair market value (FMV) of your home is when coming up with that list price. But what exactly does that mean and how do you determine that number?
Fair Market Value Explained
What is FMV?
In the real estate market, a home’s fair market value is the price that a property would sell for if sold on the open market. In this scenario, both the buyer and seller are reasonably knowledgeable about the property in question and the area surrounding it. They also agree on the price of the home. But we all know that several things affect the actual price of a property for sale (supply and demand, the home’s size, its age, the neighborhood, etc). Thus, negotiations become an important factor in completing a home sale.
How Is FMV Calculated?
Various elements help determine a Southern California home’s fair market value. These include current local market trends, comparing what other properties in the area recently sold for, an appraiser’s official determination of your property’s value, and price-per-square-foot analysis. All of the information may overwhelm the typical layman. That is why you need to hire a real estate agent that knows your neighborhood.
What is This Info Used in Real Estate?
Well, it can actually help raise or lower your list price based on the popularity (or lack thereof) of your neighborhood. However, government entities determine your property taxes based on the FMV of your property. The higher the value, the more you owe. It also may affect your tax credits or estate taxes. Did you bequeath your home to someone in your will? Inheritance taxes are based on the FMV of your property. Insurance companies use the FMV to decide the replacement value if your home gets damaged or totaled in an emergency. That list may not cover every scenario but it gives you a basic idea of how fair market value affects various aspects of real estate.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
