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Property Market Value Vs Selling Price

Property Market Value Vs Selling Price

Property market price is determined by fluctuations of supply and demand, it indicates that someone is willing to pay for a price of an asset, refer to who is motivated, but not cause by compelled to buy a property. It is the best price reasonably obtainable by the seller and buyer at the date of the valuation.

Malaysia Valuation Standard (MVS) define Market Value is the estimated amount for which a property should exchange on the date of valuation between willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Normally, property price will be transacted on its market value, otherwise purchaser has to top up the amount of differential sum between purchase price and loan financing amount.

For example,

Purchase price is $300,000

Property Market Value is $250,000

Differential sum is $(300,000-250,000) =$50,000

Property selling price that market in an advertisement is Seller’s desires price, there is offer price to sell in the market, but not a market transacted price. Normally, property will be transacted successfully on the market value. It is important to check the market value before pay earnest deposit, otherwise will end up pay more than expected to pay. Furthermore, loan to value ratio (LTV) is based on Property Market Value, but not purchase price.

Mortgage amount = LTV x Market Value

For example,

Purchase price is $300,000

Market Value is $250,000

Loan to value ratio is 90%

Mortgage amount = Market Value x 90%

= $250,000 x90%

= $225,000

Top up amount = $300,000-$225,000 =$75,000

 

If the purchase price match the market value $250,000

$250,000 x 90% = $225,000

$250,000 – $225,000 = $25,000 (10%)

 

Only pay 10% of purchase price upon signing Sale and Purchase Agreement.

RealPlace My: Property Malaysia and Real estate for Sale, Rent & Auction 37