BASE MARKET VALUE THEORY

Base Market Value theory is an evolving real estate valuation method developed through the practice and strategy of value-based investors. At its core, the Base Market Value method of valuation differs from other estimated market valuations systems in two main ways:

1: The range of data used to derive Base Market Values are comprised of recent hyper-localized market sales data along with current market supply and demand data. Other valuations that use recent posted sales data alone only paint a picture of the value of a property in its recent past because the sales information is usually 30 days or older. Base Market Value combines recent sales data along with the most current market supply, pricing and demand information. This merging of SOLD and FOR SALE information provides up to date real-time market valuations that effectively reflect today's market activity, as opposed to valuations based solely on the last month's sales data. Any accurate market valuation of a property today is based not only on yesterday's sales data, but also what is happening with pricing, supply and demand in the local market now, at the hyper-local neighborhood level. If supply is low relative to demand then a properties value today will incrementally increase. Conversely, if the market supply exceeds demand then pricing will trend slightly lower. While these movements may be impossible to decipher on any one given day, the compilation of this data over time identifies trends in pricing and fractional market movement. The price of today's currently available supply effects the value of a property as much or more than the value of its recent comparable sales. With the advancing technology available today, Base Market Value has moved to the forefront of applicable, relevant, easy to use value-based methods.

2: Base market valuation is fundamentally strong at its core. It is a valuation system focused on the value driving building blocks of the real estate appraisal system. Base Market Value does not aim to dictate the maximum possible value of the property. The formula's components focus on the fundamental features of real estate; Square footage, lot size, utilities and amenities to name a few. As its name indicates, Base Market Value establishes a foundation for the value of any given property. A property's base value is the value of the property in its basic, stock, "FAIR" condition form. A property's Base Market Value indicates today's value of the property in clean, functioning, livable condition. It purposely excludes the extra frills and added "intrinsic" values that a seller may put on a property based on their own preferences and circumstances. These unquantifiable features ultimately do not hold true value in a fluctuating market. By ignoring these added inflators, Base Market Value provides focused, fundamental valuations that users can build on.

APPLICATION OF BASE MARKET VALUE: Base Market Value is an excellent tool for identifying opportunities in the market because it is a indicator of the property's true core value in its most basic form. When used as a LOW threshold for a neighborhood's value, a property with a List Price LOWER THAN its Base Market Value may indicate a buying opportunity. A property listed for sale below its Base Market Value is likely available at a discount for a few reasons:

1. The seller is pressured with unusual time constraints and is forced to sell fast.

2. The property is in need of repair or remodeling.

3. An absentee or Out of State Owner is more concerned with the time value of the money sitting in the property, and has increased motivation to "Cash Out", even at a lower price.

4. In a distressed sale situation, the seller and/or lender has determined that a quick sale at a reduced price is the best alternative.

In contrast to Base Market Value, Fair Market Value (FMV) is an estimate of the "ideal" market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the real estate market.

Base Market Value's practical advantage over FMV for value-based buyers is that it ignores these "ideal" circumstances in an "ideal" market because "ideal" circumstances in an "ideal" market rarely exist. From a practical standpoint, relying on FMV in real life situations for investment purposes is ineffective.

***Use Base Market Value wisely. As with any real estate purchase, market valuation is only one component. Consult an appraiser, real estate attorney, real estate professional, home inspector and title insurance representative in every case. DO NOT purchase real estate without properly conducting your full due-diligence, title inspections and physical inspections of the property.