Fonville Morisey Realty/Chapel Hill Sales Office

How is Fair Market Value Determined?

by Mitzi Powell 01/08/2020

Image by Andrey Popov from Shutterstock

The term "fair market value" is the price at which an interested but not desperate buyer is willing to buy and a motivated but not distressed seller is willing to sell on the open market in your location. The set value depends on recently sold similar-sized homes with like amenities, upgrades, and location. These are known as "comparables" or "comps" in real estate jargon.

Your best resource for learning the market value of your home is your trusted real estate professional. They have access to lists of homes like yours that sold on the open market in recent weeks and months. Of course, no one can know if your home will sell since other factors might be at work too. Changes in local industry and the job market might cause prices to move either down or up. Weather can factor in also.

What if prices drop?

Should you enter the market just as prices begin trending down, you might choose to set your price just below the fair market value. That way, you won’t be forced to lower your opening price if they keep trending downward. To stay competitive, increase the value, not the price. Professionals know ways to market your home’s exceptions such as recent upgrades, repairs, a new roof, walkability, proximity to social life and other seemingly intangible items that keep your home at the top of people’s list.

What if prices go up?

Neither you nor your agent can accurately anticipate the market. But if prices seem to be going up, set yours near the top of the “fair” values. Try not to overprice your home since doing so can have unintended consequences. Lenders and underwriters operate slightly behind the market adjustments, so when you set a too high price, your buyers may not qualify for financing.

Setting the price

Your agent can help you set the right price the first time. Trust their knowledge and expertise in the marketplace. If you’re not sure about the price, test the waters by asking your agent to keep your home as a pocket listing. That is, a listing they can tell agents and clients about that doesn’t appear on the multiple listing services (MLS). That way, you can see if your pricing strategy gains any traction.

About the Author
Author

Mitzi Powell

TRUSTED REAL ESTATE SPECIALIST
Mitzi Powell is a native of North Carolina and a graduate of UNC-Chapel Hill. Her ties to the University are still strong, and she is an avid Tar Heel fan. Mitzi grew up in the Goldsboro area and currently resides in Chapel Hill. A Triangle resident for most of her life, she knows the area thoroughly. Before obtaining her real estate license, Mitzi was a Public Information Officer for the North Carolina Department of Transportation. The skills she developed in this position forming and maintaining associations has enabled her to create lasting relationships with clients and customers in the real estate industry. Clients always have confidence in Mitzi and know that she will go above and beyond for them.

In her time as a broker, Mitzi has earned a reputation for being committed to the best interests of her clients. As part of the Fonville Morisey team, Mitzi has enormous resources at her disposal. Fonville Morisey provides all of the services a home buyer or seller requires. FM Lending, Fonville Morisey’s in-house mortgage company, makes financing your home readily available. FM also has an in-house title company, Guaranty Title, which backs FM listings through an exclusive in-house warranty program that covers sellers from the date of listing at no cost. Trust Mitzi and Fonville Morisey with your real estate needs and see why so many others have counted on them.