The GERBES GROUP welcomes our groupies to read our blog. Today's topic is HOME VALUE vs PRICE

As listing agents, we prepare a CMA or Competitive Market Analysis to show the owner what similar homes have sold for in the past few months and what homes are under contract. Note: Although homes currently listed for sale may be helpful, they are never used by appraisers until they close title. With this information, we determine the MARKET VALUE. VALUE relates to what something is really worth today, not last year, last month or even last week. Value is determined by the conditions and influences of the marketplace.

The PRICE placed on a home for sale is a MARKETING TECHNIQUE and does not always match the MARKET VALUE of the home. It is the task of the real estate appraiser to judge whether a specific price obtained under a specific transaction is indicative of MARKET VALUE.

A price obtained for a specific property under a specific transaction may or may not represent that property's market value: special considerations may have been present, such as a special relationship between the buyer and the seller, or else the transaction may have been part of a larger set of transactions in which the parties had engaged.


Another possibility is that a special buyer may have been willing to pay a premium over and above the market value, if his subjective valuation of the property was higher than the Market Value. An example of this would be the owner of a neighboring property who, by combining his own property with the subject property, could thereby obtain economies-of-scale.

PRICING, although the decision of the owner/seller, is the most important element of our marketing plan.