Mak Realty Group Chicago Real Estate

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The value of real estate can be determined by any of three different methods: income, market, and replacement values. For purposes of selling, we use the income and market approach. We compare investment properties by income and cap rate. The market approach mandates that we compare the sold prices of similar properties. For residential properties, we use the market approach. Whatever method is chosen, the most important variables are always: location and condition. Prices and terms are significant variables.

The value of a given property is not determined by the seller or by the broker; it is determined by the buying public. And the price the buyer is willing to pay is predicated on the prices of similar properties in the same location. A serious investor will make comparisons with other properties in the marketplace and the property that is perceived as overpriced will be overlooked.

When overpriced properties come into the market, they remain on the market. Then, an unfortunate chain of events begins, which is very difficult for even the best seller/broker team to overcome. Intelligent and savvy prospective buyers are aware of how long the property has been available and they decide there must be something wrong with it. This perception leads to sales resistance. It is difficult to promote enthusiasm for a property that continues to meet unfavorable reaction from prospects.

Lending institutions are becoming more cautious in their lending limits. In this market, an overpriced property that may sell to an uninformed buyer for a higher price may then fail the appraisal process.

There is also the unpleasant prospect of significant financial loss for the seller when the property remains on the market for an extended period of time. Even though the property is for sale, the taxes, insurance, interest, utilities, maintenance, and repairs still must be absorbed by the seller.

When a property is realistically priced, and therefore easily marketed, it will sell.

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