MARKET ANALYSIS

Comparative Market Analysis

A Comparative Market Analysis (CMA) is a tool used by real estate agents to value a home. It evaluates similar homes that have recently sold in the same area. Agents find comparable sales and use them to conduct a sales comparison. In most cases, an agent will find three homes that have recently sold and are as similar to and located as close to the home being valued as possible. Each one is then analyzed to pinpoint differences between it and the home being valued. Once these differences are priced out, the price of each comp is adjusted to see what it would cost if it was identical to the home being valued were it to be sold in the current market.

SCHEDULE AN APPOINTMENT

Based on a Professional’s Opinion

A valuation is an unbiased assessment of a property's worth based on professional expertise. They are typically utilized by mortgage companies for home purchases and refinances. A lender typically requests a property valuation, and the associated cost, sometimes amounting to $500, is covered by the homeowner. A qualified evaluator conducts a thorough visual inspection of both the interior and exterior of the property, while also considering recent sales of comparable properties and prevailing market trends. Subsequently, the evaluator compiles a comprehensive report on the property, which may include an exterior building sketch, a street map depicting the property and any comparable sales, photographs of the property and surrounding area, an explanation of the square footage calculation methodology, and any other pertinent details.

REFINANCING

Lenders base the amount of their loans on the value of your property and usually allow you to borrow a maximum of 75% to 96.5% against your property. Knowing what your home is worth allows lenders to calculate your equity in the home. The more equity you have, the better terms you will receive on your refinance.

HOME IMPROVEMENTS

If you’re doing home improvement projects to increase the resale value, you want to make sure you’re not pricing it out of the market. If your home is already priced on the high-end for your neighborhood, making too many improvements could make it more difficult to sell. When you get a valuation, you can see how your home compares with others in the neighborhood and let this guide your home improvement decisions. Before making final decisions on significant home improvements with a goal of increasing your home’s resale value, it’s recommended to consult with an experienced broker, such as Mary Pong, to clarify which improvements will have the most impact.

QUALIFYING FOR CREDIT

If you want to borrow cash against your home, getting a Home Equity Line of Credit (HELOC) could be a good option. To qualify, you must have a certain level of equity in your home. Most lenders require at least 20%. Getting a home valuation will help you determine if you qualify and will be used by the lender to make a decision on your loan.

PLANNING

Though it’s not a necessity, simply knowing the value of your home is good information to have. It will help you plan for the future and deal with unforeseen circumstances when you might be in a position that requires extra money or a quick relocation. Knowing how much equity you have in your home and how much you may be able to borrow against it or sell it for will help you respond to any financial curveballs that life throws at you.