Understanding Property Values – Comparative Market Analysis
The most common method of determining the “fair market value” of a property is to hire an appraiser. This is not typically done prior to listing a property for sale, but rather at a later time when an offer to purchase has been negotiated; a contract entered into, and then the Buyer’s lender hires an appraiser, at the expense of the Buyer to determine the value of the property.
In the meantime, another method of determining value is done which is very similar to an appraisal, but not as in-depth and rigorous. It is referred to as Comparative Market Analysis or CMA for short. As your real estate agent we employ this methodology at various levels in assisting both Buyers and Sellers determine the value of a particular property.
Several units of measure are performed. First, there is a “subject” property, or the property that is viewed to be listed or purchased. A sampling of sold properties within the last year that compare to the subject property are extracted for comparison. Deductions and Additions can be made to the comparable properties for things like age, bedrooms, baths, and etc. The end result is a price range for a property might sell for. A sampling of current listed properties can be made and using the same deduction and addition methodology determine how the house should be priced against the current market. Make note that other factors can have either a negative or positive effect on the suggested list or sales price such as: Desirability Factor, supply and demand, how well maintained a property may be, and etc.
As your agent, we are here to assist you as a Buyer or Seller in helping you determine fair market values. We have experience in determining property values and will educate you on our discovery so that you can make informed buying and selling decisions. For more information read here.