Thursday, May 27, 2021 / by Steve Ticknor
Appraised Value vs Fair Market Value
Appraised ValueThe 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 ValueThe 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
Originally posted on our Lake Havasu real estate blog here: http://www.sunstonerp.com/appraised-value-fair-market-value/.