Market Value
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Market value
The market value is defined as the highest price in which a property will sell in the open market, with the seller and buyer being fully inform, and providing a rasonable period of time
Four elements that create value in real property are:
D = Demand
U = Utility
S = Scarcity
T = Transferability
Demand referes to the amount of potential buyers interrested in the real property. thus, the real property increase value when the availabilty of property is lower than the number of buyers.
Utility can be defined as how useful a property is. The more amenities a property has,the grater the value will be. for example, a property with swimming pools, patios, garage, views, etc. will be more valuable.
Scarcity can be defined as limited resources or lack of abundance. when property is scarce the value tends to increase because the resources needed to satisfy desires are limited.
For example, rural land is cheap because it is not scarce. Most people dont want to live in the rural area so there is not a big competition. On the other side, property on the urban land is much more scarce because it is more desirable.
Transferability refers to identifiable title transfer of the property to a buyer. The value of a property can be afected depending in the tranferability. The more encumbrances or restrictions against a property, the less the price vaule.
The most accurate factor used in the market value of a property is market comparison. Recent sales on similar properties done in nearby neighborhood. Also location play a important role in the value of property.
For example, a property located in the Marina District, California is more valuable than a property located in Sunset District, California.