If you offered your house for sale at $2 million, it would never sell (or it would remain on the market until inflation caught up with your price). If you asked $100 for it, you’d have a sale before your advertisement even hit the papers. (The supervisor of the newspaper’s classified ad department would be at your door five minutes after you called.)
So you need only search for the figure, somewhere between $100 and $2 million, that will attract buyers and at the same time bring you the most money. One point is clear: If you can sell for $100 in five minutes, and for $2 million in 20 years, obviously time and money are related in real estate sales.
If you are under no pressure to sell, you have the luxury of exploring the market, experimenting with price, and accepting an offer without pressure. This process is likely to yield the highest price.
If, on the other hand, you are working under a deadline, a no-nonsense price, slightly under true market value, will bring immediate action. When such a listing comes through the daily computer printout, one agent, idly reading, says to another, “Listen to this. A three-bedroom house in Suburban Heights for $270,000.” And the other says, “Aren’t they going around three hundred over there? Won’t last.” Both reach for the phone to give the news to penny-pinchers they’ve been working with. The scene is repeated in any number of MLS offices, and that’s one way houses are sold in a day.
A one-day sale, though, does not meet the standards set for fair market value of property. The concept of fair market value comes from the field of appraising.
Fair market value has been defined as the most probable price a property will bring if it has been widely exposed on the market, if sufficient time is allowed to find an informed buyer, and if neither party is under undue duress.
Pricing your property involves an attempt to estimate fair market value, depending on circumstances.
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