What is the difference between an Appraisal and a Comparative Market Analysis, you may ask? Selling your home can feel like an overwhelming task. As Brokers and Realtors, we walk our clients through each step all the way to closing. The first step is a Comparative Market Analysis of your home. This will be our starting point to set a listing price. Some Home Sellers may want to hire an appraiser before putting their home on the market because you own a unique home and there are no recent comparable sales within your neighborhood.
What is an appraisal?
An appraisal is an unbiased professional opinion of the value of a home and generally used to value collateral in a real estate transaction. Appraisals are required for most federally related transactions above $250,000. In practice, appraisals are used whenever a mortgage is involved in buying, refinancing, or selling a property.
A licensed and certified appraiser creates a report based on a visual inspection, using recent sales of similar properties, current market trends, and aspects of the home (e.g., amenities, floor plan, square footage) to determine the property’s appraisal value. When getting a mortgage, the buyer’s lender is appointing an appraiser of his choice. When the appraised value is lower than the purchase price, the transaction can be delayed or canceled. Appraisals can also be used to determine how much to insure your home for. In addition, appraisals are used to figure out property taxes. So, although an appraisal for a loan estimates today’s market value, one for insurance purposes is used to determine what it would cost to rebuild your home with the associated costs of today.
Lenders nowadays often use Broker Price Opinions for short sales or foreclosure properties to determine a listing price. Brokers and Realtors can prepare Broker Price Opinions to estimate a probable sales price of a property.
What is a Comparative Market Analysis
How is CMA’s (Comparative Market Analysis) different from appraisals? The purpose of a CMA is to establish a range of value for a property that a seller wishes to sell. An accurate range reflects market conditions at the time of the transaction. After a property value range has been determined, the CMA is used to help sellers identify an asking price. In other words, a CMA provides an objective, market-driven starting point for pricing properties.
Automated Valuation Models (AVM)
Both Lenders and Real Estate Brokers use Automated Valuation Models (AVM). They offer a certain range of values and indicate a confidence score. Realtors also use the RVM (Realtor Valuation Model). We always do a visual home inspection to calculate the most accurate home value.
Everyone knows Zillow’s most favorite feature is called the Zestimate, which is also an AVM. There are more automated valuation models available to us. Each provider uses different variables to arrive at a value. All models are great to have a starting point, but in the end, nothing compares to a personal visit to see the home and compare it to other homes in the area.
Have you had any thoughts on selling your Englewood Home?
The 2020 real estate marketing is changing quickly. See how that is impacting your home value. If you are not yet ready to talk about selling, you may want to watch the value of your home before talking to a real estate agent. We’ll provide you with a seeling guide before you start the listing process. Here you can dive right into the 7 important things to consider before putting your home on the market.
If we can assist with your current or future real estate needs, please don’t hesitate to reach out.