Finding a home that is priced below market value is the holy grail for any home buyer who is combing through the Toronto real estate listings or the listings here in Aurora. However, only under very specific circumstances would a home be priced below its market value. To help you find these homes, we've explained how market value is determined and under what circumstances a home might be priced under the fair market value.
The market value of a home is set at whatever a buyer would be willing to pay for it. In essence, the true market value of a home cannot be set until it is sold, which would mean that technically there is no such thing as a price that is "below market value." But practically speaking, the market value can be derived before the sale by a Kingston, Ontario REALTOR who knows what other homes of similar size in the same neighborhood have sold for in the past few weeks or months. Therefore a price that is below market value would be less than this aggregate.
So why would anyone price their home below market value? Usually because other considerations force them to accept a lower price. Many Mississauga Real Estate agents will warn, for example, that any seller who is looking to make a quick sale will have to settle for less than market value to avoid time consuming negotiations.
The most common situation in which you would find Scarborough houses for sale priced below market value, however, is when the home has been repossessed by the bank. These types of sales are known as foreclosures. Because the bank is not willing to do any work on the house, it is sold as-is. And because the bank is just looking to recoup their losses from the previous owner's failure to repay their mortgage, they will often sell the property at a discount in order to get rid of it quickly.
Another situation in which a home can be bought for market value is at an auction. Sometimes ownership of homes passes to local or federal governments for failure to pay property taxes or seizures resulting from crimes committed by the owner. These situations are similar to foreclosures in that the government will auction the properties off for whatever they can get regardless of the calculated market value because they have no outstanding loans to pay off. North York real estate agents, however, will caution you against auctions, as the homes are often in bad shape.
|