PRICE versus VALUE ?


For many property buyers it is much easier to see and track price rather than base decisions on value.

Price can be an advertised price or the actual sold for or settled price while value can be either that mathematical calculation ie monetary worth or what a purchaser appreciates in a property.

Price is very relevant in an immediate sense to sellers & buyers & to their financial situations & budgets.

Most properties are advertised by price and there are public records of settled sale prices. This information can be obtained by individuals through public records or can be purchased from one of the market data supply companies.

Another aspect to this is that the market can change quickly depending on supply, demand & even market sentiment or government intervention which means that property prices can be below or above the actual market  and advertised prices may not represent what is happening in the market in real time.

In real estate there is a difference between property price and property value. The significance of property value in a clinical sense is that it is the basis for assessing property taxes & Council rates, for calculating if a sale is at a profit or loss for taxation purposes, for lenders to know that there is enough equity in the property for the amount of the loan and for both seller & purchaser to have a reference to an independent market value. At a personal level it should not be forgotten that there are also aspects to a property that a purchaser values.  Things such as that basic desire for shelter, security & private ownership, location, budget, a personal or family need.

For First time Property Purchasers especially the temptation to buy when there is a perceived $ saving is understandable but can lead them to overlook that that a $ saving may not represent value.

Remember that Price is what you pay and Value is what you get!