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The Difference between "Price" and "Value" and Why it's Important!

A home's market price is the price agreed upon by a willing buyer and a willing seller. That price might not be the original listing price, or even represent the property's true market value.
 
Whereas market value is an opinion of what price the property could bring in an open market given that the participants are motivated, well-informed, and rational.
 
Theoretically Price and Value are the same. But real estate is the perfect example of an imperfect market.
 
During times when the real estate market is balanced, when supply and demand favor neither buyer nor seller, "price" and "value" are likely to be close.
 
But when the market is not balanced, such as it is right now, when demand far outweighs supply, the potential for large disparities between price and value is great
 
Motivated, well-informed, and rational. Three assumptions we make when considering market participants. When buyers and sellers are not equipped with the most relevant, up to date information, "value" and "price" tend to diverge.
 
When market participants make irrational decisions, the potential for disparity is even greater.
 
And this is where we are today.
 
Navigating a real estate market that is changing quickly, sometimes within the same neighborhood, with participants often making decisions that are not in their own best interests. We like to believe we all have perfect information because of the internet, but having access to data is not the same thing.
 
The path to a successful purchase or sale is anything but straightforward. A good place to start is understanding the difference between "value" and "price". The differences are nuanced but important.
 
Call or text anytime. I'd be more than happy to discuss the market and offer my advice.
 

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Work With JC

Since 2001, JC has been involved in the Real Estate business. He spends the majority of his time as a Realtor®, helping buyers and sellers navigate through their real estate transactions.
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