Monday

Who says?

Fair Market Value

In the real estate world we say, " The seller doesn't set the price, the Realtor doesn't set the price, the buyer sets the price". And don't forget the banks. Their hat is in the ring too because, well, because they can. Read on.

Fast forward......imagine this conversation between motivated sellers and Dory the agent..."But the bank told us our house was worth $195,000. That's how we got the second mortgage to buy the van. We have an appraisal on the house for $195,000. Your market analysis can't be right, $185-191,000. We'll take a loss, if we sell it where you're suggesting to price it!"

This is the very moment, the three granules of sand passing through the hourglass, that Dory triangulates knowledge of the market, experience and wisdom. Here's a short list of Dory's mini wisdoms:

1) The real estate market is like any other market, it fluctuates- so does the value of your home. Better value if you take care of it-worse if you don't.

2) Banks are securing their loans by assigning a value to your home. The banks are not charged with trying to sell it. Appraisals are based on homes sold-not how many houses are on the market just like your property. Borrower Beware.

3) Borrowing as much as the bank will give you without a 10% cushion of equity is dangerous. The moment you need to sell your home is the very moment you'll wish you had borrowed less in order to have some flexibility to compete in the current market.

4) Ask your real estate agent to come in and give you a market analysis before you go to the bank for a loan. Get the current market value from the agent that is in the business of selling properties everyday.

In my mini story, Dory the agent, will have the task of educating the sellers about the current market and explaining banking motives for giving homeowners 100% value loans. Finally, Dory may have to exercise the wisdom to walk away from a potential listing that could linger on the market for months or more because the sellers cannot afford to sell their house. Placing an overpriced house on the market defies common sense. Being a smart seller means staying in touch with your Realtor whenever it comes to evaluating the equity of your home. Class over, now get out there and have a great day!