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Originally Posted by FSETH
Not true. People list at a higher value than what they really want to get for something knowing that negotiations will take place. Maybe in your example the seller wanted to get $450,000 so he asked for $500,000 in the first place?
Short sales and foreclosures are not sales at market value. Those would be examples of below market value sales or distressed sales. Read my post #69 for a complete definition of what market value is. It is pretty clear. The key to market value is a typically motivated buyer and seller. Not an extremely motivated seller as with a short sale or foreclosure.
Also in your example, maybe the seller really "wanted" to only pay $425,000 for the property and ended up being willing to pay $450,000? At the end of the day it is a compromise between what the buyer and seller wants. Market value is set at the point which both feel an acceptible compromise.
Please re-read post #69. It is a good definition.
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I don't think you're being an ass, and hopefully I'm not being one, but I guess we're all agreeing to disagree.
I think you missed an important aspect of what defines market value. "the price represents the normal considerations for the property sold unaffected by
special or creative financing or sales concessions granted by anyone associated with the sale." the frenzy market was created by this exact phrase. you say that short sales and foreclosures are below market value sales, but once they close, isn't that where the market is at? if my neighbor bought his home for $500K, why would I want to pay more than that for a comparable home? i have a client in escrow right now who is paying essentially 25% below what a comparable unit sold for in the building last year, and this is not a distress sale (list price was about 18% below the sold unit). while that maybe below market, that price will dictate what other units will sell for in the area. so if a future seller tries to get a price that is significantly higher, he would be hard pressed to find a buyer that will pay that much more than the last sale.
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Originally Posted by FSETH
x5Guy, I am not trying to be an ass, but of course the seller wants $8 billion for his house and the buyer wants to get it for free, but the price point at which the buyer and seller agree and are willing to "sell" and "buy" is market value. Keep in mind that the seller and buyer have to be typically motivated. The market value is the point at which those two parties agree. Without the seller you don't have that point and without the buyer you don't have that point. It really takes 2 to tango and they are both equally involved in the process.
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I agree that where the market is is where the buyer and seller agree. yes it takes 2 to tango, but one always leads and is in control. before it was the seller, now it's the buyer. maybe our markets are different. here in LA, if you price your home over market, you've pretty much killed any chance of selling your home at market value. perfect example is my aunt who is also an agent tried selling their home for almost $4 mil. I told her it's not worth more than $3.5 in this market. she got an offer for $3.4 and didn't take it because she thought it was too low...now 8 months later, she can't even sell it for $3.2. the market was at $3.4 and not the $4 mil she felt her home is worth. hindsight is 20/20 and i know she'd take $3.4 in heartbeat now.