The market value is the price a buyer is willing to give on an asset in an open market. Market value does fluctuate over time depending on the business cycles and economic conditions. For example, the market value of many assets will decrease dramatically during an economic recession or when there is a pandemic.
On the other hand, the value of houses increases in better economic conditions. For example, we experience the seller’s market during good economic conditions. Your home will sell for more in these conditions because many people will be biding on it.
How to calculate market value?
It can be difficult to calculate the accurate value of an asset. There are a lot of moving parts when calculating the value of your home. Economic conditions, locations, quality of the house, and many other factors have to be considered.
The following are some of methods used to calculate market values.
- Comparative Market analysis: Real estate agents use comparative market analysis to determine the market value of a house. They do this analysis by comparing that house with similar houses recently sold in the same area under the same conditions. Learn more about comparative market analysis.
- Professionally conducted appraisal: During an appraisal, an appraiser will evaluate the house being sold in order to determine the accurate market value of the house. The appraiser will evaluate many factors including location, market conditions, possible defects associated with the house, etc.
- Website evaluation: Online listing companies like Zillow, Realtor, Trulia, etc. can help to estimate the value of a property you want to buy. The value you will get from these websites will not be accurate. However, they can give you a rough estimation of the property’s value. You can adjust this value using additional data collected from the house such as structural problems, etc.
