Whats Really Changed For Buyers

Comparative Market Analysis (CMA)

By definition a property is worth what a ready willing an able Buyer will pay for the property. That can be and often is an amount that's greater then a bank will accept based on the lender's Appraisal. While Appraisals are considered more objective and authoritative because the appraiser has no stake in the sale, the reality is that even though Appraisers are trained to be objective and unbiased, their methodology is inherently conservative. This often leads to lower valuations especially in fast-rising markets! Appraisers rely on historical, closed-sale data (data-driven) rather than the current or potential future market values, and they will usually err on the side of caution to avoid provided what's viewed as an inflated or risky valuations!

A Comparative Market Analysis (CMA) is an indication of the property’s value based on a detailed and adjusted analysis of the 4-6 most relevant and similar properties that have recently sold in your development and/or nearby.

A good CMA should also increase or decrease the value based on the current market conditions including, interest rates, and the supply and demand at that moment in time. Most real estate agents will perform a CMA before listing a home for sale and great Buyer’s Agents will also complete a CMA when working for a buyer who is considering submitting an offer on a property.

This is an indication of the property’s value based on a detailed and adjusted analysis of the 4-6 most relevant and similar properties that have recently sold in your development and/or nearby.

A CMA should also increase or decrease the value based on the current market conditions including, interest rates, and the supply and demand at that moment in time. Most real estate agents will perform a CMA before listing a home for sale and great Buyer’s Agents will also complete a CMA when working for a buyer who is considering submitting an offer on a property.

This is an indication of the property’s value based on a detailed and adjusted analysis of the 4-6 most relevant and similar properties that have recently sold in your development and/or nearby.

A CMA should also increase or decrease the value based on the current market conditions including, interest rates, and the supply and demand at that moment in time. Most real estate agents will perform a CMA before listing a home for sale and great Buyer’s Agents will also complete a CMA when working for a buyer who is considering submitting an offer on a property.

This is an indication of the property’s value based on a detailed and adjusted analysis of the 4-6 most relevant and similar properties that have recently sold in your development and/or nearby.

A CMA should also increase or decrease the value based on the current market conditions including, interest rates, and the supply and demand at that moment in time. Most real estate agents will perform a CMA before listing a home for sale and great Buyer’s Agents will also complete a CMA when working for a buyer who is considering submitting an offer on a property.

An Appraisal

State-licensed appraisers will walk through a property and write an official appraisal report. While appraisals offer a little protection for buyers regarding the value of a property, the customer for the appraiser is the mortgage lender not the buyers. Banks typically require appraisals when refinancing your home, or getting a mortgage for a new home, to minimize the lender’s risk by making sure the bank is loaning no more than what the property could be resold for if the buyer was unable to repay their mortgage loan.

Instant Online Value Estimators

The Iron Triangle Of Service: Good, Fast, And Cheap -- PICK TWO. You Can Never Have All Three, As The Saying Goes! 

Online Value Estimators are Fast and Free... And Free is the ultimate definition of cheap! So, since you can NOT have all three, and these online instant valuations are Fast and Free, then that means these Estimators can NOT also be Good!

There are many real estate and lending websites offering estimators out there. You can use this if you want a general estimate of your home may be worth. While these can help you decide if it’s worth considering selling or refinancing, these sites tend to dramatically undervalue or overvalue property values. So, using these when selling or purchasing a new place could create unrealistically high or unreasonably low expectations that could cost you thousands of dollars as both a seller or a buyer!

Price Per Square Foot Calculations

Price per square foot calculations are often used by sellers, buyers and unfortunately even by many real estate agents to determine the value of a property in comparison to other recent sales. This approach divides the sale or list price by the above ground square feet to arrive at a price per square foot.

If you are comparing to identical floor plans, with identical finishes and features, built at the same time, by the same builder on lots next to each other and both places have continued to have identical updates, then this approach might yield a meaningful value. However, this is rarely the case since price per square foot calculations do not reflect the many differences in properties like, bed and bathroom configurations, land value and location, views, garage spaces, finishes, updates and improvements, the year the place was built or any of the hundreds of differences between homes.

Mitch Refers To This Calculation As Only Pricing Validation, NOT Pricing Valuation!

Once a property CMA has been completed this calculation can be used to determine if a property has been overimproved or is overpriced within the neighborhood, development or area. If the price per square foot, based on a proper CMA, is dramatically higher than similar nearby places then the property is likely overimproved! Additionally if the price per square foot, based on the CMA, is dramatically lower than the price per square foot based on the list price, then the property is likely overpriced.