MARKET ANALYSIS

Comparative Market Analysis

A Comparative Market Analysis (CMA) is a process used by real estate agents to accurately price a home. It evaluates similar homes that have recently sold in the same area. Agents find comparable sales and use them to conduct a sales comparison. In most cases, an agent will find a minimum of three homes that have recently sold and are as similar to and located as close to the home being valued as possible. Each one is then analyzed to pinpoint differences between it and the home being valued. Once these differences are identified, the price of each comp is adjusted to see what it would cost if it was identical to the home being valued were it to be sold in the current market.

The final dollar amount is the recommended price the agent believes the property will most likely sell for. 

PROFESSIONAL APPRAISAL

Based on a Professional’s Opinion

An appraisal is an opinion of value from a licensed, professional appraiser. They are hired by home sellers, home buyers or lenders to determine the actual value of a home based on the current market conditions, location, age, property condition, and use of the property. Appraisals can be used for multiple things, but they are most commonly used when a buyer is obtaining a mortgage to purchase a home or if a current homeowner wishes to refinance their mortgage.

A lender usually orders the home appraisal and the cost of the appraisal, sometimes up to $500, is paid by the borrower (either the buyer or the current homeowner). An appraiser does a complete visual inspection of the interior and exterior of the home as well as taking into consideration recent sales of similar properties and market trends. The appraiser then compiles a detailed report on the home, including an exterior building sketch, a street map showing the home and any comparable sales, photos of the home and street, an explanation of how the square footage was calculated, and any other relevant information. The final property valuation is given to the lender for them to determine if the property is a safe asset for them to lend on, and it protects the buyer or homeowner from loses due to negative equity.