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Market Value

Market Value is the amount for which an asset could be sold in an open market.

The Market Value of some assets such as shares in a company is easy to determine — the market is very accessible, all relevant information is known, shares tend to be liquid and the prices listed.

On the other hand, it is notoriously difficult to determine Market Value for Property,

Market value is essentially the price that the market is prepared to pay for your property.

A more formal way of putting it is: “The estimated price that a willing buyer would pay and a willing seller would accept for an item in an open and competitive market.”

The main thing to understand about market value is that it generally relies on emotions to drive up the price.

A great example of this is at auctions where buyers often get carried away with the competitive environment and end up paying much more than their budget to “win” the property.

Likewise when a market is hot, then buyers can have FOMO (or Fear Of Missing Out) and end up paying too much for property.

It’s impossible to say what a property will sell for on any given day, but by researching comparable sales, homeowners can get an idea of what the market value may be.

You may find this article interesting – Bank valuation vs market value – how much is your property worth?

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au