Uncategorized May 24, 2021

Market Value vs. Market Price. Do you know the difference?

In real estate, many agents suggest that it all comes down to price. It is true that a property sells just because of price? What about the value component? As a Realtor I will determine a market price without viewing the property based on comparables and market data. Then I determine a market value once viewing and assessing all the benefits, the condition of the property and external market data. The two terms definitely influence each other.

Market price is what a willing, ready and able buyer will pay for a property AND what a seller will accept for it. The transaction that takes place determines the market price, which will then influence the market value of future sales.
Price is determined by local supply and demand , the property’s condition and what other similar properties have sold for without adding in the value component.

The major difference between the two is that market value, in the eyes of the seller, may be much more than what a buyer will pay for the property or its true market price. Value can create demand which can influence price. But without the demand function, value alone cannot influence price. As we are seeing in our current market, as supply decreases and demand increases, the price will rise and value will influence price. Interesting to note that in a balanced market, market value and market price and be equal.