The answer
The asking price is the amount a seller lists their home for. Market value is an estimate of what an informed buyer would reasonably pay and an informed seller would accept under current market conditions. Those numbers can differ.
A seller might list close to the estimated value, higher to leave room for negotiation, or lower to attract more interest. The asking price reflects a pricing decision. It does not establish the home’s value.
Recent sales of similar homes provide stronger evidence. Look for properties in the same area with comparable size, layout, condition and lot characteristics. Then consider the differences. A renovated home backing onto a park may command a different price than a similar home needing substantial work.
Homes currently for sale help show what buyers can choose from, but their asking prices are still expectations. Completed sales show what buyers and sellers actually agreed to.
For example, imagine two comparable homes each sell for $800,000. One was listed at $750,000 and the other at $850,000. One sold above asking and the other below, yet both reached the same sale price.
That is why “below asking” does not automatically mean a bargain, and “above asking” does not automatically mean an overpayment.
Before making an offer, ask your real estate broker to explain the relevant recent sales, how the home compares and whether conditions have changed since those sales occurred. For sellers, the same review helps establish a realistic asking price.
The useful question is: What does the evidence support for this particular home?