Recently I was posed the question by somebody close
to me who is thinking about selling their home in Gilbert, AZ, âhey so what is
the difference between a comparative market analysis (CMA) and an appraisalâ. I thought to myself, âself, that would be a
great educational piece for my blogâ. So
here it is in a nutshellâŠ Appraisals
An appraisal is a written estimate of a propertyâs market value
completed by an appraiser. The value is based upon a market analysis of recent
sales prices for similar properties in the area, and the propertyâs physical
condition. An appraisal is what a bank or financial institution will look at
when originating a mortgage loan or completing a refinance.
The appraisal is performed by an appraiser, an objective third
party whose job is to give their professional opinion of the market value of a
home. An appraisal is the appraiserâs opinion of the propertyâs value based on
their knowledge and evaluation of the property. This opinion or estimate is
developed using the three standard approaches to property valuation:
The Cost Approach estimates what it would cost to replace
or reproduce the improvements as of the date of the appraisal, with deductions
for issues like physical deterioration. This is added to the land value to
determine that value of the property.
The Comparison Approach looks at properties of similar
size, quality and location that have recently sold in order to derive a
comparative value. Variations between the properties are factored into the
valuation by adding or subtracting amounts to adjust for things like more
bathrooms, a smaller lot, etc.
The Income Approach is generally used for commercial
properties, and is not typically relevant for residential property valuations.
The income approach estimates the value of the property based on upon the net
income the property produces.
(Comparative Market Analysis)A
CMA is an opinion of value on a piece of property that is prepared by a real
estate professional, usually a Realtor. When someone wants to list their house
for sale, their Realtor will put together a CMA to give some validity to his
suggested listing price and show his client where he is getting this number from. A
CMA is not an acceptable opinion of value for a lending or financial
institution. When preparing a CMA, a
Realtor will use the Comparison Approach,
much like the appraiser does. By
comparing sold and currently listed properties in the area of the subject
property and using adjustment factors, your Realtor can get a good idea of your
current market value.If
you are interested in selling your home in Gilbert, AZ or any part of the
valley, and would like a CMA give me a call at 480-241-4570 or email me at Eric@THGrealty.com. You can also perform your own searches on
current listings by visiting my site www.Eric.THGrealty.com
Author:Vanguard at Treehouse Realty Phone: 480-241-4570 Dated: July 21st 2014 Views: 287 About Vanguard: Two local firefighters from the east valley have teamed up to create a program that gives people who...