MARKET VALUE VS APPRAISAL VALUE
So, you've decided to sell your home, now choosing a real estate broker is your next step. Teaming up with NYC’s #1 Real Estate Brokerage means your property, your investment, and your financial business is in the hands with an experienced, professional, and competitive Corcoran agent.
When it comes to strategizing a price point we will walk you through past sales in your building or neighborhood, making sure that they mirror your space very closely when it comes to layout and look. A real estate agent who preforms a comparative market analysis (CMA) calculates the subject property's market value and helps tell a story of the market's conditions which ultimately lead to a sales price recommendation. Viewing past sales data can give us an indication on how the market will value your property, and in turn what a buyer will be willing to pay for your property. The market value is different from an appraisal value. An appraisal is a sheer opinion of value, curated by a licensed appraiser from an independent entity. which calculates a properties market value for a specific date in time.
In an ideal seller's market, the price your property sells for is usually much higher than what an appraiser declared it to be worth. Why?
Appraiser's valuation process is not swayed by demand in the market, or appeal of a particular neighborhood culture. An appraiser will assess more tangible aspects of the property versus like the quality of workmanship, efficiency of the space, property tax advantage (421a tax abatement), and more so that a lender can better understand the value. Banks/Lenders need a 3rd party (outside of the real estate agents involved, and their in-house loan processing teams) to certify the value of a property before a loan commitment letter is issued. Companies like REIS Group, will perform accurate, timely Certified Appraisals on Coop, Condo, Townhouse, and Multi-Family dwellings throughout the five boroughs but remember an appraiser’s worst enemy is unexpected market trends. If prices in a specific neighborhood rise quickly, due to new developments, new businesses, or transportation advancements, appraisers may not be able to quantify these changes as value to your home fast enough. “Because it can take two or more months from the time a contract is signed on a home to the time appraisers learn of the offer, such fluctuations are not always reflected in the available comps, or comparable reports. Appraisers can make what is called a time-adjustment to account for market shifts, but it may be hard to get a lender to accept it. [1].
A buyer, their agent or council may use an appraisal as negotiating grounds to convince the seller that their property is worth less. This is when you'll be glad you hired a broker to defend your price, and ensure property sells for its current demand.
As an agent at the forefront of the market there's a lot of research that goes into correctly pricing your property before it actively goes on the market. We act as liaisons, showcasing your property only when it looks its best, and saving you time as we vet real prospective buyers based on their finances. There's no headache of doing it all yourself and more importantly your privacy is kept and respected.
Sources:
[1] http://www.nytimes.com/2013/01/13/realestate/getting-started-assessing-the-value-of-a-home.html