Real estate is truly a numbers game. From the price you list your home at, to the price you’re willing to pay for someone else’s home, to the assessed value of a property, there are a lot of different numbers floating around that need to be considered. But, before you can figure out how to properly leverage an offer, it’s important to understand the values you’re working with.
Most important to understand is the market value vs. the appraised value of homes for sale in Alpine, TX. These two numbers may be similar in nature, but what they represent has a profound effect on how you list a home or what kind of offer you decide to put in on one.
Market value is what someone is theoretically willing to pay for a home. It’s usually a number that’s in flux and is greatly affected by market conditions and external factors, such as the price of comparable homes in the area.
Market value is important to understand because it helps homeowners and buyers alike come to a resolution. For example, if the market value of a home is around $300,000, it gives a seller a figure to list their home at, with the expectation that someone would see that value as reasonable. For buyers, it establishes a baseline for what they can expect to get for their money out of comparable homes and can drive bidding.
Appraised value is what the bank is willing to pay for your home—more specifically, the amount of a mortgage loan they’ll cover. It’s the physical nature of the property in its entirety and the value is assessed in much the same way as market value in terms of looking at exterior variables like location and comparable homes.
Think about our $300,000 house. If that’s the appraised value, a buyer might not be as willing to bid up on it, knowing the bank might ask them for a larger down payment or reject their mortgage application if it exceeds that value. Likewise, a seller might use appraised value to set a more lucrative price point based on what they previously bought the home for years ago.
How One Affects the Other
Market and appraised values often clash. For example, if market value is higher than appraised value, it could mean homeowners have to pay more upfront for their prospective homes. Likewise, if appraised value is lower than market value, it can signal inflation in the market, which leaves sellers feeling great and buyers in a bubble. Both values are important individually and when juxtaposed.
At the end of the day, the price you set for your home for sale in Alpine, TX or the price you’re willing to pay need to both be reflective of market and appraised values. Finding a price point that plays nice with both of these values is the smartest way to facilitate a transaction that’s smooth and free of hassles and headaches for both buyer and seller.