what is the difference between fair selling price and fair market value?

Question

fair market seems derived from tax assessment but is much lower than asking price - is it a good indicator of what to offer?

Answer 1

if you are truly looking at a real estate tax bill that shows you what "fair market value" is, it has absolutely nothing to do with the asking price of a piece of real estate. it is only used to determine the real estate taxes per year of that parcel of real estate.

if you have a good real estate buyer's agent, she will provide you with what are called "comparables," i.e., "comps" for the type and location of the property you want to purchase.

comparables are what is similar real estate that is generally located no further than a 4-block radius surrounding what you want to buy, is of a similar nature (say in a high rise vs. a low rise condo building), and which actually sold and closed within the past 6 months.

depending on location, location, location, even where you are going to be living on a given street, such as on the sunny corner lot vs. one of the houses on the same street, between other houses, the sales price will vary.

let's say your location even boils down to one condo building and you want a one bedroom condo of 2,000 square feet. the same 2,000 sq. ft. 1 BR penthouse w/lake views vs. the same square footage 1BR unit with windows facing onto an adjacent building is going to have both a listed price and sales price that's higher.

in the entire 200+ years of our history, a single family house always sells for a higher percent of the asking price than any other type of real estate.

USUALLY, in a seller's market like today, a single family house will bring in a final sales price of about 96% of the asking (listing) price. depending on where you are buying, usually a condo goes for less than 96% of the listed price.

you need to ask your agent to see SOLD "comps" just to verify final sales prices. it's public knowledge.

so say you are purchasing a single family house. it's fair LISTING or asking price is $100k. you will generally offer about 91% of that, then usually the seller and you will agree that the purchase price will be about 95-96% (in a standard market), of $100,000, meaning about $95,500. if you look at the tax bill for the house, it will most likely show you a "fair market value" of anywhere between 8-25% (high) of the fair asking price!

remember that if a parcel is not priced to sell, it will not sell, not then. everything, however, does sell EVENTUALLY. it depends on how long the seller wants to wait!

Answer 2

All I can do is define for you Fair Market Value. This is usually an insurance or claim term. It is defined as what a reasonable person would pay for an item, and what a reasonable person would sell the item for, factoring in no need to purchase it right away.

Answer 3

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