Fair Market Real Estate Value Defined- Berkshire Real Estate
Berkshire home sellers can teeter between hope and worry in the housing market in the Berkshires. Berkshire buyers are confused and hesitant. Real estate agents often fall somewhere in between the emotions of hope and despair depending on the particular day and month. Our agency serves the entire of Berkshire County Ma. including Stockbridge, Lenox, Great Barrington, Williamstown, Hancock and all towns in between.
Harsch Associates Berkshire Real Estate (established in 1975) has experienced the rise and fall of the Berkshire Real Estate market through many cycles. Our Berkshire housing market follows the general tide of the overall US economy. Fortunately, in the Berkshires the rise and fall of home prices is less volatile than many other markets.
Harsch Associates has tracked the average median selling price of single-family homes in Berkshire County since countywide records became available in 1987 and the average rate of appreciation over that time span is 6% per annum. That sounds good. Similar to the stock market in many ways, the prices of homes in Williamstown and Berkshire County can shift without warning. What goes up will come down.
If you purchased a Williamstown or Berkshire home in 2000 and sold the home in 2007 ( the peak year for home values in the Berkshires) you enjoyed roughly 60% appreciation in price. However, if you sold in 2009, you gave up over 20% of any potential gain. Sellers who sold Berkshire Real Estate recently (2010) have fared less well. Berkshire real estate buyers have snapped up many right priced homes in the 2010 housing market. Berkshire home values today have dropped back to 2004/2005 levels. This leads us to a discussion of determining fair market value so that you can actually sell your property to a Berkshire Buyer.
What is fair market value? FAIR MARKET VALUE IS THE PRICE AN INFORMED BUYER IS WILLING TO PAY A SELLER WITHOUT PRESSURE CONSTRAINTS ON EITHER PARTY. This means neither party has to buy or sell in an emergency.
Why are Berkshire County home inventories so high while Berkshire home loan interest rates are so low? Berkshire Buyers are still purchasing homes but unfortunately many Berkshire sellers are not pricing to the current market. The main reason for not selling a home within a reasonable amount of time (which can vary) is that many homes are priced above current fair market value.
Current fair market value pricing applies to many items including homes and stock shares. Can you imagine going to a stockbroker and insisting on selling your valuable stock in XYZ Corporation for $80 per share when the current fair market value is $65 per share? You can insist on the undeniable value of XYZ stock shares. You can explain to the stockbroker how when you bought your shares the company was soaring and every investor wanted a share of XYZ. You need to receive $80 per share because you paid $70 per share and you deserve a profit since you have held the stock for several years.
However, when the stock market day is done the cold hard truth is that no wisestockbroker is going to pay you $80 for a stock share that is only valued at $65 in today's market. At this point, you can keep the XYZ stock share and wait to see if the price rises again. If the price falls even lower, you will have lost more than your initial $15. Would you keep a stock that continued to decrease in value? Maybe for the long term, but keeping an unused or no longer desired home is a pricey investment that will quickly drain your wallet. This is especially true if you no longer live in the home.
Real estate and stock shares prices behave similarly. Current supply and demand for Berkshire properties determines the fair market value. If someone insists his or her property is worth $500,000 and another home with more amenities is available for $400,000 then the wise buyer will most likely purchase the least expensive of the properties at $400,000 which is the fair market value the buyer is willing to pay.
So, how does a Berkshire seller know what the current fair market home value is in Williamstown or any other Berkshire town right now? A licensed Berkshire Real Estate appraiser is the best way to approach the thorny issue of fair market home value. Ask your Real Estate agent for several references or follow this link to the American Association of Home Inspectors to find a local certified home inspected with a reputation for accurate work.
Another more complicated approach 9used by your Williamstown Real Estate Agent is to look at the average rise and fall of home prices in the Berkshires or your particular town/neighborhood. The average market analysis comparative Berkshire home price is based on the median selling prices obtained for similar properties in similar neighborhoods Williamstown or other Berkshire towns. This median price is usually fairly accurate unless you have made substantial changes or investment in your property, which should be taken into consideration before finalizing a listing price. Realtor.com and Zillow.com offer basic tools for estimating the fair market value of your home, although no one is more qualified to quote a fair market home value for your Berkshire property than a professional real estate appraiserworking with your real estate Broker.
Fair Market Value is determined only through logical analysis, not guesswork or dreaming. If a seller is sincerely motivated to sell then obtaining an appraisal prior to listing a property with a Berkshire Broker is the best advice. Not pricing to the current real estate market is the most common cause of Berkshire Properties languishing on the market for years with no offers to purchase.
If you are truly motivated to sell your home then price it to the current fair market home value. Many Berkshire Real Estate Agents will quote you a listing price that meets your dreams but that will not sell your property. Best advice: work with an experienced broker who takes the time to analyze the market and to provide written carefully documented numbers that support pricing recommendations.
Let go the notion that a wealthy stockbroker from New York's Wall Street with loads of money will pay you more for your home than a local buyer will. Fair market home value is reality. Today's wise buyers will not waste hard-earned money. Educated buyers are looking for a fairly priced home. When a Berkshire buyer finds a home they want that is priced to the current market, they will be quick to make an offer.
Paul Harsch, Broker
Harsch Associates Berkshire Real Estate