Home valuation is an important part of the property sales process. It allows a seller to determine a listing price that will attract buyers, pay off the mortgage and make a profit.
Real estate agents use CMAs, or Comparative Market Analysis, to evaluate homes. These analyses are based on comparable sales and other data, including:.
Market Analysis
Whether you’re buying or selling real estate, it helps to understand the local market and how much comparable properties are worth. A detailed market analysis – also known as a comparative market analysis, or CMA – is one of the best ways to accomplish this. Local real estate agents and brokers often create CMAs for clients to help set list prices for homes. These reports can also be helpful for homebuyers looking to see if a seller’s asking price is high or low.
To do a comparative market analysis, you’ll need to compare the property in question to similar homes that have sold in the area recently. You can find this information from a number of sources, including online listing databases, county assessor websites and the local real estate office. To make your analysis as accurate as possible, be sure to select homes that are the same size as the subject property, have the same number of bedrooms and bathrooms and are in a similar condition. Also, consider any unique features that may increase or decrease the value of the property.
Once you’ve selected the comparables, calculate their average price per square foot and add them together to arrive at an estimate of the subject property’s value. Take into account any unique characteristics of the subject property that could impact its value, such as a large lot or special features like swimming pools. Finally, compare the estimated value of your property to the listing price and closing date of the comparables to determine a range of values that your property might be expected to sell for.
A complete market analysis should take into account both the current conditions of the local market and larger economic influences that may affect demand for this type of real estate in the future. For example, investors focused on cash flowing rental property might want to avoid distressed neighborhoods or markets that are experiencing rapid population growth.
Developing a detailed market analysis can be time-consuming and labor intensive, but it’s important to know how to do it. Failure to conduct a thorough market analysis can result in errors in proforma financial statements and valuation models, adding unnecessary risk to investment and feasibility decisions.
Comparable Sales
A real estate appraisal, also called a comparative market analysis, determines the value of a home by comparing it to similar properties that have recently sold. These comparable properties are referred to as “comps” in the real estate industry. Real estate professionals use comps to help sellers and buyers determine a fair asking price for a property.
In order to accurately evaluate a home, comps must be comparable in terms of location, size, age, and features. The comparison must also take into account any outside factors that could affect the subject property’s value, such as a change in the local economy or job market.
To find accurate comps, real estate agents and appraisers typically use a local MLS to gather data from nearby homes that have recently been sold. They also may review listing prices for homes that are currently on the market and those that have been under contract, but these listings don’t always reflect current market conditions.
Comparable sales are typically limited to properties that have been sold within the past year. This is because market conditions change rapidly and using older comps could result in an inaccurate valuation. In rare instances, however, an appraiser may be able to use a comp that was sold more than a year ago, if it meets certain criteria and is a good representative of the neighborhood.
In addition, a comp must be a true sale and not a construction-to-permanent loan. Appraisers must be careful to avoid creating comparables that are based on construction-to-permanent loan transactions or pending sales, as these do not represent actual selling activity and therefore cannot be used in the appraisal.
It is important that the comparables are well-maintained and in a condition similar to the subject property. Otherwise, they will not be a good representation of the property’s current value. For example, if the comparables have marble countertops and hardwood floors while the subject property does not, the appraisal will need to be adjusted to reflect that fact.
In addition, the comparables should be in the same type of development as the subject property. In most cases, this will mean that the comparables should be in a condo project, subdivision, or PUD. However, if no comparables are available, an appraiser can use a unit in a competing condominium project, subdivision, or PUD as a comparable if it is reasonably close in terms of size and features. In this case, the appraiser must verify that the comparable sale actually occurred by viewing a copy of the settlement statement from the builder.
Assessed Value
Home valuation is an important number for both potential buyers and sellers. It’s the amount that active real estate buyers would be willing to pay for your property, and it plays a role in everything from determining how much you’ll get when selling your home to setting an asking price for when you put your house on the market. However, you also need to consider the property tax assessor’s value, which is determined by local and county government authorities for taxation purposes. It’s often a different figure than the market value.
To determine the assessed value of your property, an appraiser will look at the sale information for similar properties in your area. They will consider the square footage, number of bedrooms and bathrooms, and other features, as well as the overall condition of your home. They will take into account any recent improvements you have made, and they will also consider income your home may generate from rent or other sources like a basement apartment or in-home office. They will then multiply the market value by a specific assessment rate to come up with the assessed value of your home.
The difference between market and assessed values is important because your home’s assessed value will determine how much you pay in property taxes. It’s important to understand both numbers so that you can make an informed decision about whether or not homeownership is right for you.
In addition to being able to decide whether or not a particular property is worth buying, having an understanding of the assessed value of your home can help you plan for future expenses. For example, if your home’s assessed value is lower than its market value, you could potentially qualify for a refinance loan that will allow you to reduce your mortgage payments.
A property’s market and assessed values can fluctuate based on market conditions, but an appraisal is typically a very accurate way to determine your home’s worth. This is especially true if you work with an experienced real estate appraiser. For more information about how to choose the best professional for your appraisal needs, contact us today.
Assessment Review
Understanding your home’s value is an important part of knowing your net worth, determining how much you could receive from selling your property and calculating the amount of property tax you must pay. While online calculators and appraisal tools can give you a rough estimate, an official valuation can provide you with a more definitive number. However, if you are not satisfied with your home’s assessment, you can appeal it.
A city, town or other taxing authority conducts periodic property assessments to identify an estimated market value for all properties in the municipality. These values are then used to calculate property taxes. While assessments may take into account some features that appraisals do not (square footage and the number of rooms, for example), they are based on a municipal assessor’s drive-by evaluation of each home. For this reason, they are often lower than appraised or true market value.
You may file an application with the municipal assessor or a member of the Board of Assessment Review to dispute your assessment. The latter works full-time year-round and reviews applications until March of the following year, when its final determination appears on the tax roll. The Board consists of five Webster residents who have knowledge of local real estate values.
If your application is approved, the board will notify you and the assessor’s office of its decision. Typically, you will be required to submit additional evidence in support of your claim. However, state law places the burden of proof on you, so you must present compelling factual evidence that your property is being unfairly assessed.
If your application is denied, you have the right to appeal the decision in New York State Supreme Court. The commission will also provide you with a list of other steps that you can take to appeal its decision.