Short Sale Basics Part One: Market Value
(This is part 1 of 5 of the short series entitled Short Sale Basics)
At its core, a short sale is a standard real estate transaction. A house is listed for sale at a price comparable to the surrounding market activity, including sold properties, competing properties for sale, and properties under contract. A buyer makes an offer based on their personal assessment of the surrounding market. Until that offer is accepted by the seller and subsequently closed, a market value is subjective.
The market moves. It’s alive. It changes from moment to moment. Our culture, driven by consumerism, is so tied to the idea that a product’s price is set in stone that the value of an item really does remain in the hands of the company or person selling it. That’s why I so often hear people who call me off of my signs ask me “what a house is selling for.”
This is simply not true.
Price is determined by so many combinations of factors that no single entity is responsible for the asking price and you as the consumer don’t have to pay what someone asks just because they put a sticker on it. Every product we buy and sell, including a home, is negotiable, and the value of a traded good is only worth what it was last paid for at the moment the transaction took place. Only moments later, all of the dynamics that led to a certain price being paid for a good or service change and the process of valuation begins all over again. That is why products that are traded more than once never have the same “most recent” price.
Market value is subjective.