Comparative Market Analysis – CMARE62RC10

Jody OBrien

Comparative Market Analysis Category - Real Estate Glossary - Real Estate Terminology

Comparative Market Analysis or Competitive Market Analysis is often referred to as a CMA.

A CMA is a study or comparison of recently sold homes, properties that failed to sell, as well as properties currently on the market, that are substantially equivalent to another home in terms of selling price, location, style and amenities.www.realestatewiki.com

What is the Difference Between an Appraisal, a CMA and a Zestimate?

Category - Home Selling FAQ's - General Home Selling

The appraisal is the process of developing and communicating an opinion about a property’s value. The appraisal is conducted by a licensed professional typically working for the lender. It usually includes comparable market information or direct sales comparison, reproduction or replacement cost estimates and, if applicable, the income approach which considers capitalization of net operating income from a property.

A comparable market analysis (CMA) is estimation of a property's value is based on the recent sale prices of properties within the same area that are comparable in square footage, amenities and features similar as well as information regarding comparable active properties (for sale on the market) and expired properties (where the assumption is that they failed to sell for being overpriced.)

The Zestimate - Zillow’s home valuation approach - is computed using a proprietary formula and historic sales and local authority data. It often does not include changes, upgrades or local nuances unique to the property and can therefore only be seen as a starting point in determining a home's value or a broad range of value.

Appraisal Terms

Cost. Cost is the amount of money expended to build or acquire a home.

Price. Price is the amount of money presently asked for a home

Value, Value is an estimate of the benefit of ownership and is typically expressed in dollars.

Appraisal Terms

Market Value. Market value is an average price based upon current market conditions

Regression. Over improvement beyond market value.

Progression. An under-improved or under-developed home below market value of the neighborhood.

Appraisal Terms

Substitution. The cost of building or acquiring an equally desirable substitute somewhere else.

Conformity. Homes in a neighborhood should reasonably conform in terms of style, price range, size, features, etc.

Contribution. The value of an item in a home decreases and the number increases.

Purpose

Market Condition DOM List to Sale Price Ratio Average Sale Price Inventory or Absorption Rate

Market Condition

Market Conditions

MLSPin Economic Market Watch

Purpose

Range of Value Negotiations

Financial alternatives Short Sale Mortgage Workout Assumable Seller Financing Seller Participation

Purpose

Net Equity Mortgage Pay Off Amount “Put in your Pocket” Negotiate to Win Win Net Sheet

Purpose

Get an appointment Show professionalism Create trust and confidence Serve as a script

Content

• Cover title page and photo• Introductory letter• Area map• Complete property description• Public information

Content

Owner’s nameAddressLegal descriptionInformation on whether the property is a Torrens

property – Registered land

Contained in the Deed

Content

• Amount of annual taxes• Pending assessments (including specials)• Assessed building value• Assessed land value (if separate)• Total assessed value • Year of construction• Lot square footage or dimensions• Building square footage

Contained in the Accessors Card/Field Card

Content

Mortgage information Type Current payment status Pay off amount Prepayment penalty Assumption fee and requirements

Comps

• Active• Sold• Expired• Under-agreement

Value

• Market Condition• Financing• Time

Value

• What makes a Comp a Comp?• Buyer Pool

– Size – Location– Bed/Bath/Room– Condition– Supply and Demand

Price Range

• Worth vs Value• Buyers set the Value• Sellers set the Price

Competitive Pricing

• Faster• Less inconvenience• Exposure• Agent response• Better Buyer reaction• Higher offers

Jody O’BrienThe RE/Education Company

Committed to Professionalism in Real Estate through Education

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