What is Fair Market Value?
The Oakville Real Estate Market is changing very rapidly – both Buyers and Sellers must be careful. We have seen an onslaught of business in January and early February as Buyers took advantage of great mortgage rate deals supplied by TD and some of the other big banks. But those deals have been pulled early as the gap was simply too big for the banks to cover. Some smaller lending institutions have stepped in to fill the gap, but don’t expect those rates to stay around. This flurry of activity with some houses actually going over asking is coming to an end. Which brings me to the topic of this blog – Fair Market Value. It’s a moment in time. FMV for your home may have been different last month and it may be different next week. It’s a concept Sellers must understand. (There’s also nothing more frustrating than dealing with a fellow Agent who uses area sales statistics from 6 months ago!) The actual selling price of your home has little to do with equity or location or even the pool you just put in. The value is simply an indicator, a measure of demand. The home didn’t create the value, the economy did. I hear it again and again – “We have to get out what we put in – the original purchase price plus our upgrade expenditures”. NOT TRUE!! I also hear homeowners demanding a listing price similar to a neighbour’s home. Understand the market value of your home is also dependent on square footage, landscaping, finished basements, finishes etc. And I always say, kitchens and bathrooms sell homes. But, BE CAREFUL. Your Return on Investment may not be tangible for 5 years. If you are Upgrading for Resale, have your Real Estate Agent advise you – they will ensure the upgrades impact the price with a good Return on Investment. But, make sure you have a very knowledgeable Agent with a good track record (and connections) on Upgrades for Resale.
Bottom line, it doesn’t matter if you paid $1m or inherited the property at a cost of $0 – you will only get Fair Market Value – that is, what an educated Buyer will pay for your house given the current economic conditions. And that will change from month to month.