2 min read

Market value vs. sales price: what's the difference?

A small house model figurine on a newspaper article with the headline "Immobilien" (real estate), surrounded by blueprints and a calculator.

Market value

Before a property can be sold, you need to find out what its financial value is. This is where the market value comes into play: various methods can be used to determine the objective value of a property. The market value thus forms the basis for the selling price of a property and is based on the price that can be achieved in the ordinary course of business at the time of the determination, taking into account all relevant factors such as location, condition and building materials used. This value is determined without taking into account personal or unusual circumstances and takes into account legal circumstances and actual characteristics. In simple terms, the market value represents the most likely selling price.

A distinction is made between three valuation methods: Comparative value method, income value method, asset value method. The appropriate method is selected depending on the type of property and the buyer's preference.

Table of Content

Sales price
Market value vs. sales price
Good to know
Conclusion

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Sales price

The sales price or value is the price that is actually paid when selling/buying. It corresponds to the amount that buyers are prepared to pay on the open market.

Market value vs. sales price

While the market value is only a calculated value, the sales price is a value that is actually paid. In practice, it is quite common for market value and sales price not to match. The sales price can be higher or lower than the market value, whereby the difference between these two values can vary. If the gap is small, a fair price has been paid for the property. If the sales price far exceeds the market value, a price was probably paid that the property is objectively not worth. If there is a high demand for real estate, it is possible that properties are marketed at a higher price than the market value.

Good to know

The market value is not only necessary for the sale of a property, but can also be relevant for real estate financing. Banks use the market value as a basis for determining the maximum loan amount. If the purchase price is far above the market value, the loan amount, which is usually 10 to 20 % below the mortgage lending value, is significantly lower, which in turn means that the difference must be paid with equity.

Conclusion

The market value is a calculated value and indicates how much a property or plot of land is objectively worth. It serves as the basis for determining the sales price. The sales price is the price for which a property is ultimately sold. The two values may coincide, but they do not necessarily do so.

In order to generate the correct market value and ultimately a good sales price, it makes sense to consult experts. Our advisors will be happy to help you and assess your property free of charge.