What is FMV, "Fair Market Value"? Three-Tiered market

[drbubb]

What is FMV, "Fair Market Value"?  PHL has a Three-Tiered market

There are THREE PRICES for Property in the Philippines Market:
1. Developers REPLACEMENT value;
Which includes all their costs, land, materials, construction costs plus marketing costs, and the developers profit margins.  This price is “managed” by the developers, and will rarely be a bargain.  The developer might sell at this price on an instalment  basis, and even help the Buyer to obtain finance from an affiliated bank.

2. COMPARABLES price
Based on what prices are achieved in the secondary market, where the Seller may wait months for the Buyer to get bank finance.  This may require the seller to have a clean title, and keep the unit vacant while they search for buyer.  (Often is near the Zonal valuation of the property, and it may be significantly below NEW List prices of nearby properties.)

3. (DISTRESSED) CASH SELLERS price
The best price the buyer can obtain from Cash buyers within a limited time frame.  The buyer may have to advance funds so the seller can repay the mortgage and then wait for the title.  It may not be possible for the buyer to get bank finance, so they may need to have free cash available,  The buyers are often investors, who will expect to achieve an Yield similar to what they can get from the REIT market (currently 6.5%), or higher than that, if the property is old and/or needs renovation,

( Please compare my detailed description here, with some vague and conflicting descriptions people may use for “Fair Market Value.”  I do people hope people will spread this to add more clarity, for Buyers and Sellers. )

 

[drbubb]

Another Definition:

 

I cannot consider Developer LIST prices as Fair Market Value.

Here's why: When someone pays the List price, and tries to Sell, they will often get a much lower price,

like 20-30% Lower, and sometimes more than that.

The developers have "Big Sales machines", which help to sustain their prices.  The developers also often offer financing, or installment plans, over long period.   The Re-seller does not have those Advantages.