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One of the most surprising things about selling a home is finding out that the home appraisal value and the comparative market analysis don't match. How is a home valuation determined? Let's find out.
For the last four years, economists at meetings held by the National Association of
Realtors® and the National Association of Home Builders have predicted declines in new and existing home sales, based primarily on expected increases in 30-year fixed mortgage rates.
You don't need to be a real estate agent to realize that these predictions have fallen well short of reality. Instead of falling, sales have reached record levels; interest rates are still low; and the average home valuation has increased 10 percent from 2003 to 2004.
In order to get a better idea of the how the hot realty market affects your home, let's take a look at how your home's value is determined.
Whether you use a Comparative Market Analysis, a professional home appraisal, or an assessed home valuation to determine the value of your home,
a real estate agent is an invaluable resource in a home sale.
What is a Comparative Market Analysis?
A comparative market analysis (CMA) is an informal estimate of market value performed by a real estate agent, and it is based on the sales of properties with similar attributes. Most agents offer this service for free to win your business, and the information is often used to decide on a listing price for an impending home sale. A realty professional considers a number of factors to develop the CMA including:
You can also get a comparable sales report from private companies that specialize in real estate data or find comparable sales information available on various real estate internet sites. In most cases, you'll pay a small fee to access this information.
A comparative market analysis (CMA) is an informal estimate of market value performed by a real estate agent, and it is based on the sales of properties with similar attributes. Most agents offer this service for free to win your business, and the information is often used to decide on a listing price for an impending home sale. A realty professional considers a number of factors to develop the CMA including:
- Size
- Age
- Location
- Amenities
- Other properties that are currently for sale, have been sold, or were listed but never sold, in the area.
What Is a Home Appraisal?
A home appraisal determines the market value of a home by looking at the supply and demand of homes in specific area, comparing the home with others that have recently sold, and finally determining the amount of material and labor costs of replacing the home in the current market. Lenders usually require a professional home appraisal before approving a requested loan amount.
A home appraisal determines the market value of a home by looking at the supply and demand of homes in specific area, comparing the home with others that have recently sold, and finally determining the amount of material and labor costs of replacing the home in the current market. Lenders usually require a professional home appraisal before approving a requested loan amount.
Just the Tax
In addition, a home appraisal can be requested by the government to determine the assessed home valuation for property tax purposes. This information, if made public, is available through the county tax assessor or county clerk for a small fee.
In addition, a home appraisal can be requested by the government to determine the assessed home valuation for property tax purposes. This information, if made public, is available through the county tax assessor or county clerk for a small fee.
Sticker Shock
People are often surprised to discover that the appraised value and the comparative market analysis aren't the same.
There are several different reasons for this disparity.
- The appraisal amount usually reflects the cost of replacing your home, but the CMA determines a price that someone will pay for your home. In a seller's market, the sale price can be much different from the home appraisal value if there are multiple offers on the home.
- While the real estate market is constantly changing and information is constantly being updated, all city and county property assessments are assigned an effective date and are valid for that particular period of time. The more time passes, the higher the possibility that there will be a disparity in the values.
Agent Provocateur
Finally, when it comes to pricing your home for sale, few people can offer you as much expertise as a real estate agent. Find a good real estate agent and work with them to increase your home's potential value. With so much at stake, having a skilled professional to represent and protect your interests and to help you complete the sale is invaluable.
Finally, when it comes to pricing your home for sale, few people can offer you as much expertise as a real estate agent. Find a good real estate agent and work with them to increase your home's potential value. With so much at stake, having a skilled professional to represent and protect your interests and to help you complete the sale is invaluable.
About the Author
Edward Castro has extensive experience as a creative media writer. His client portfolio has included such notables as Hewlett-Packard, Sony Computer Entertainment, Shockwave, AtomFilms, GameBlast and Mervyn’s California. In his current position, Ed is developing the marketing strategy of an Internet start-up company specializing in Japanese trade goods.
Edward Castro has extensive experience as a creative media writer. His client portfolio has included such notables as Hewlett-Packard, Sony Computer Entertainment, Shockwave, AtomFilms, GameBlast and Mervyn’s California. In his current position, Ed is developing the marketing strategy of an Internet start-up company specializing in Japanese trade goods.