Price vs Valuation
The valuation gives us a figure that a willing purchaser would be expected to pay, and a willing vendor would be expected to accept.
However, there are many variables that can affect the eventual sale price.
Vendor wants quick sale
We know that
current market value
is defined as "
the price at which a willing but not anxious vendor would sell, and at which a willing but not anxious purchaser would buy",
but circumstances may change a vendor from being "willing but not anxious" to "keen and committed".
A vendor becomes keen and committed when the sale of his or her property is all that stands in the way of some other goal. For example, the vendor may have found
the perfect new home, and entered into a contract. As the settlement date approaches, the vendor becomes more and more keen to sell.
When the need for bridging finance, the costs associated with a default on the purchase contract, and the stress associated with the sale and the move are all considered, accepting a
price that is lower than current market value may become an attractive proposition.
Vendor can wait for the best offer
Only one purchaser
Numerous competing purchasers
"Knock-Out" offer
Property over-valued
Property under-valued
"Best house in worst street" syndrome
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