When it comes to real estate, one property can have several different values depending on who is evaluating it and why. If you’re wondering why your home gets one price from a real estate agent, another from the county assessor and yet another from a developer, you’re not alone. Understanding the distinction between market price, assessed value and developer value can help you determine what your property is truly worth and how to sell it especially if you’re thinking about selling to a real estate development company.
Let’s look at each of these three values and why they’re important especially in a city like Chicago, where zoning and location can have a significant impact on your property’s appeal to Chicago developers.
1. Market Price – What a Buyer Is Willing to Pay
The market price (or market value) is the most frequently mentioned figure. It is essentially the price that a buyer is willing to pay for your property under normal circumstances, as well as the price that a seller will accept. This price is affected by several factors, including:
- The state of the property
- Location and neighborhood trends
- Local real estate market conditions
- Recent sales of comparable homes.
This value is used by real estate agents and appraisers when listing a property or evaluating it for a mortgage. It is the value that most homeowners are aware of.
However, this value assumes you’re selling to a traditional buyer, such as a family or individual looking for a place to live. However, if you’re thinking about selling to a property development company, the market price may not accurately reflect your full potential.
2. Assessed Value – What the Government Thinks It’s Worth (For Taxes)
Your local tax assessor determines the assessed value which is then used primarily to calculate property taxes. It frequently lags behind actual market trends because assessments occur every few years rather than in real time. In some cities assessed values are only a small portion of the property’s true market value.
This value is not intended to reflect the current selling price of your home. It serves as a tax benchmark and varies according to local formulas. For example, your home may have a market price of $500,000 but an assessed value of $350,000 for property tax purposes.
Knowing this number can help you evaluate your tax burden but it isn’t particularly useful when negotiating with real estate developer companies or Chicago developers.
3. Developer Value – What Your Property Is Worth to a Developer
This is where things become interesting. In some cases, your property’s value to a developer exceeds its market price.
Developer value is determined by what the developer can do with the land. It’s all about zoning, lot size and development potential, not your home’s square footage or granite countertops.
Assume your property is on a corner lot in a highly desirable neighborhood and is zoned for multi-family use. A Chicago developer might see the opportunity to construct a three- or six-unit condominium building. That opportunity significantly increases the property’s value for them because it is a revenue-generating asset rather than just a house.
Here are some of the factors property developer companies consider when valuing your home:
- Zoning laws: Can the property be redeveloped into something more profitable?
- Lot size and dimensions: Is the lot large enough for additional units or commercial use?
- Location: Is it near transit, schools, or other developments?
- Development costs and resale potential: What’s the ROI?
Because developers are often looking at long-term gains, they may be willing to offer you more than the current market value if your property aligns with their vision.
Why Understanding These Three Values Matters
If you’re considering selling your property, especially in a competitive urban market like Chicago it’s critical to understand all three values:
- The market price reflects what a traditional buyer might offer.
- The assessed value helps you understand your tax liability.
- The developer value demonstrates your property’s true potential whether it appeals to real estate development firms or Chicago developers.
This is especially important if you were approached directly by a developer or live in a neighborhood that is being transformed. Transitional neighborhood properties are frequently underpriced on the open market compared to what a developer is willing to pay.
Final Thoughts: Unlocking the Hidden Value of Your Property
Knowing how much a developer is willing to pay for your property opens doors you may not have thought of. Developers won’t be interested in every house, but those that are can fetch much higher prices. Don’t depend just on a typical appraisal or tax assessment if you believe your property has unrealized potential particularly because of its location or zoning.
You can learn more about the development value of your house by speaking with experts who work with real estate development firms. Knowledge is ultimately power and being aware of the three values of your property puts you in a strong position to make wise successful decisions.
Do you need assistance figuring out how much developers think your property is worth? Make contact with experts who understand the workings of real estate development firms and can offer you advice on how to maximize your sale, particularly in areas like Chicago where redevelopment is flourishing.