subject: How to interpret base market value [print this page] How to interpret base market value How to interpret base market value
Base Market Value is widely used by real estate investors as a threshold in the measurement of the value in a potential real estate deal. In car sales, the MSRP or Manufacturers Suggested Retail Price tells the Buyer the stock value of the vehicle before added features like custom wheels, four wheel drive, cruise control and special packages. The MSRP provides the buyer with a base starting point to help understand the overall final price. If, because of discounts or a special sale
LISTINGS WITH A PRICE LOWER THEN BASE MARKET VALUE
In real estate, the primary advantage of Base Market Value is that it providesa low estimate for the potential value in a real estate deal. The property's Base Market Value estimates the value of the property's stock featurescompared to other similar "Peer Properties" in the area under normal market conditions. This value can beconsidered a "stock MSRP" of the house. Properties listed for sale below Base Market Value may be influenced by one of these special conditions:
1. PROPERTY CONDITION: The property is in poor condition and needs repairs to be brought up to standard livable conditions. Similar minimum habitable standards are outlined by the Federal Housing Administration and often known as FHA conditions.
2. MARKETING TIME: The seller is under special time constraints and doesn't have time to market the residential investment property at full value and wait for a buyer.
3. FINANCES/ MONEY: Financial pressures warrant that the property be "Cashed Out", even at a discounted price.
4. ACCESSIBILITY: An Out of State or Absentee Owner has added incentives to liquidate the property and a "quick sale" price.
LISTINGS WITH A PRICE HIGHER THEN BASE MARKET VALUE
***This is not an indication of overpricing or a bad deal. The listing price and Fair Market Value" is actually higher then the Base Market Value 80% of the time.
Why?
Because most properties have added features that add value to the property's Base Market Value. In a normal market, when the seller is not pressured by thespecial conditions and constraints listed above, these added values are rightfully included in the overall asking price of the sell property Furthermore, Base Market Value intentionally excludes hard to measure, addedfeatures andvalues like city views, finished interior upgrades and secluded premium lots.
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