Master The Art Of Getting Your Property’s Worth
What is Fair Market Value (FMV) in Real Estate?
As a real estate investor who sells homes for profit, mastering the art of getting your property’s worth is important. First, you’ll want to find the fair market value (FMV) of the home. When you bought the house, you most likely checked what the fair market value was then. It might be similar now or it might differ, but it’s important to check it to be sure.
Regarding appraisals, they are nice to have, but they’re not always accurate regarding fair market value. You can have two or three appraisals come in from different appraisers and they’ll all differ. They do have merit but don’t just rely on one appraisal and think that’s the market value.
The thing with homes is that the worth of that property isn’t what the realtor, appraiser, or seller says it is. They might have strong opinions about the worth, and make educated guesses, but they can be flat out wrong. The property is worth whatever you can sell it for on the market; the fair market value.
Assessing Fair Market Value with Comps
Your best bet is to look for comparable properties to see what’s selling for what in that locale. Check comps in the past 30 or 60 days in that neighborhood to see the market value of such homes. If they’re similar to the one you’re selling, then they can provide you with a close estimate of what someone will be willing to buy that property for.
How to Calculate Fair Market Value (FMV)
Calculating fair market value is an art. It takes practice to become accurate at coming up with this value. Granted, there are various factors to take into consideration, but the more you work with real estate, the better you get at predicting those factors. And, it’s a good idea to give yourself a 5 percent variance when determining FMV.
Avoid Emotions when Calculating Fair Market Value
As a real estate investor, it’s tempting to let your emotions come into play when determining what your property is worth. Sometimes an investor will want to sell the property at a particular price so badly that they’ll trick themselves into thinking the property is actually worth that number when it isn’t. Grab the comps and run the numbers and put your faith in that, rather than your gut feeling.
Your property is worth whatever a buyer is willing to pay for it. Fair market value is just that: fair. It’s not an exact number, so try not to get all caught up in rigidness surrounding FMV. Do your homework, keep working on mastering your skill set in terms of working the numbers, keep emotions out of it, and believe for the best.
The hard work and time put in will be well worth the effort when your property sells for FMV and you get to pocket a nice sized return on your investment.