Market Value, Forced Sale Value & Reserve Price

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Market Value, Forced Sale Value & Reserve Price

What you need to know?

Some are confused with these terms and today let’s look into the real meaning of these words.

1. Market Value
2. Forced Sale Value
3. Reserve Price

1. Market Value is the estimated amount for which a property should exchange on the date of valuation between a 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.

Valuation calculations take into account recent transacted prices from the Government’s Valuations and Property Services Department (JPPH). Additionally, launch prices of new and upcoming projects in the area play a factor.

If you’re buying a completed property or doing a refinancing with a bank, then market value is quite crucial. The bank officer usually will get a verbal indication of value from bank’s panel valuer before proceeding for loan submission.

The bank is based on market value or property purchase price, whichever is lower to determine how much the loan given to a borrower.

2. “Forced Sale Value” is the amount that may reasonably be received from the sale of a property under forced sale conditions that do not meet all the criteria of a normal market transaction. It is a price which arises from disposition under extraordinary or atypical circumstances, usually reflecting an inadequate marketing period without reasonable publicity.

Forced Sale is an inappropriate mode of sale reflecting an unwilling seller condition and/or disposal under compulsion or duress.

The recommended Forced Sale Value is arrived based on the assumptions that the disposal of the property is completed in a manner reflecting the position of an unwilling seller under conditions of compulsion or duress without an adequate period of marketing for the sale of such property.

Forced sale value is commonly stated in bank’s valuation for reference.

3.Reserve Price is the minimum price at which a property will be sold at a Public Auction. Relevant Sections of the National Land Code (Act 56 of 1965) state that the Reserve Price is equal to the Estimated Market Value of the property in question.

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By | 2016-11-01T10:45:56+00:00 October 4th, 2016|Buying A Home, Home Loan Library, Latest News and Update|0 Comments

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