How can I evaluate differences in CMA’s (Comparative Market Analysis)?
Question:
We’ve talked to four different real estate firms about listing
our home. Three of the market analyses came up with a fairly
similar price; but the fourth one was considerably higher. What’s
the harm in starting at the highest price, since we can always
come down?–J.B.
Answer:
If three out of four comparative market analyses were close, it
leads me to believe that the fourth was not a true reflection of
market value. Unless there was additional information known only
by the fourth company, the approximate value indicated by the
other companies is probably closer to what a ready, willing and
able buyer would offer.
It’s important that your property be competitively priced the moment it hits the market.
An overpriced property will be forgotten by buyers and real estate agents. Statistics show that not only will an overpriced listing take longer to sell, but the sales price will usually be lower than true market value.
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Should I appraise my property before listing?
Question:
I’m just starting to look for my first home and am amazed that
more sellers don’t have appraisals done before placing property
on the market. If there is an appraisal, can’t I request that the
real estate agent ask the seller to show it to me before I make
an offer?–MP
Answer:
You’re correct—many sellers don’t secure an appraisal before
placing the home on the market. This doesn’t mean, however, that
they don’t have an idea of the property’s market value. They may
have secured a comparative market analysis from an agent, showing
a range of value, anticipated marketing time, as well as types of
terms which can be expected for the property. Most houses do not
require a presale appraisal unless the property is so unusual
that no comparable properties are available.
An appraisal may actually be a detriment to the marketability of the property. What happens if the appraiser has few comparables to use in his appraisal, causing the appraisal to come in unrealistically low? What if the seller secures an appraisal suitable for a conventional loan, only to find that the property later sells with FHA terms, requiring another appraisal?
If an appraisal has been done, the buyer can certainly ask to see it, just as the seller can deny the request. If the seller orders the appraisal, it is considered to be his confidential information. If the real estate agent is working for the seller and is aware of the appraised value, he or she would need permission from the seller to share that information with anyone else.
If you have reservations about the value, why not make the receipt of a satisfactory appraisal part of the terms of your offer to purchase? And if you’re seeking lender financing, it’s generally a loan requirement as well.
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