Wednesday, March 09, 2005

Establishing Market Value of a Property

Helping a client decide the market value of their home is really one of the most challenging aspects of our job! It is important to provide clients with a thorough Comparative Market Analysis (CMA) . This is usually presented at the listing appointment. This helps assure the client that when they do decide on the asking price for their home, the price will be a choice that will bring them the highest price they can reasonably expect, and also a price that will encourage a willing buyer. The CMA should contain the closest comparable properties to your subject property, that are either actively on the market, in escrow, or already sold. Sold properties are a sure thing, so I recommend that a number of sold properties always be included. Active and pending properties help to establish a trend direction if the market is rising or falling. These comparable propeties should be as similar in quality, size, location, lot size, age & amenities as possible to the subject property. Also, if possible, it is best when using sold properties to try to stay within a 90 day window of the current date. Otherwise, there is a risk in a fast paced market of not really establishing a "current" indicated value for your subject.
It is also very important to check out what I call "extra's" on the comparable properties. Items such as a pool, spa, guesthouse, utility shed, landscaping and views can make large differences in what a buyer is willing to pay. The comparables often need to be adjusted for all these differences to truly make them an indicator of what current market value is for your subject property. And last, but not least, is the big "condition" factor. Always take into consideration the condition of the comparable properties, as well as the subject property. It is good to remember that the seller might have to convince both a buyer and an appraiser that the sales price is truly the "Fair Market Value" of the property.


At 3/09/2005 7:00 AM, Blogger Lorraine Burns, Realtor said...

Thank you Janice. That was very informative.
Lorraine, Realtor


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