Today a great number of sellers and buyers are confusing these two key real estate terms.
According to The Dictionary of Real Estate Appraisal, Second Edition American Institute of Real Estate Appraisers:
Market Value is defined as, "The most probable price, as of a specific date, in cash, or in terms equivalent to cash, or in other precisely revealed terms for which the specific property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably and for self-interest, and assuming that neither is under undue duress."
Price is defined as " The amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding their transaction"
What one paid for a property, the the future, does NOT indicate market value. Market value is driven by "present and prevalent market conditions."
The key to all successful real estate is to buy low and sell high. Sadly some individuals today are finding that they purchased high, and if they now have to sell under these present and prevalent market conditions, may have to sell low.
Today some buyers are waiting for the market condition to push prices down further. No one has a crystal ball. This may be the rock "bottom" for years to come, or prices can continue down.
One thing is sure: the better the community, the more desirable a community is for a multitude of reasons, the slower the "pricing drop." The not so desirable communities, those with poor economic and municipal financial conditions and perhaps with a dreadful school systems, high crime, etc.,will see steep pricing drops. It's always relative.
Hope that this has been helpful
Bill McInerney, Realtor
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