High buyer demand and a low housing inventory continue to spur on our hot Lake Havasu seller’s market. Many sellers often receive multiple offers on their property from several buyers. Every month, we see sale prices climb higher and higher. But that does not mean that you can list your Havasu home for whatever price you want and expect to automatically receive it. How do you determine what to ask for your home? You should take into account the appraised value as well as its fair market value. While you might think they are the same thing, they are actually different.
Appraised Value vs Fair Market Value
Appraised Value
The appraised value (AV) is determined by an independent third party (the appraiser). First, the appraiser comes out and takes visual stock of the condition of your Lake Havasu home. They also consider the total square footage of both the home and the lot, its location, the number of bedrooms and bathrooms, features, fixtures, etc. Then, they look at recently sold properties in the area. Finally, they comb through all of this data to come up with what they determine (in their professional opinion) to be the value of a particular home. This value can vary from appraiser to appraiser.
Problems arise when the AV comes in below the sale price. A lender will not approve of a loan that is higher than its appraised value. So, the buyer may request that the seller lower their sale price. Or they may have to come up with the difference between the appraised value and the actual sale price out of their own pocket. If neither of these options works out, you could lose out on the sale altogether when the buyer walks away.
Fair Market Value
The fair market value (FMV) on the other hand is driven primarily by the state of the real estate market at the time of the sale. While the appraised value does factor into the fair market value, the FMV may still end up higher. Other factors that contribute to this are recent local sales and price per square foot. Your Lake Havasu real estate agent knows the local market and can help you find the balance between fair market value and appraised value to land on a realistic list price.
Sunstone Realty Professionals, Coldwell Banker Residential Brokerage, Lake Havasu City, AZ