What is the value of your Real Estate?
Regardless of whether you are buying or selling real estate you would like to know the value of the real estate you are planning on buying or selling.
How do you determine the value of a piece of real estate? You could hire a professional appraiser, you could talk to a friend, or you could contact a REALTOR. The professional appraiser will use a Sales Comparison Approach, a Cost-Depreciation Approach and an Income Capitalization Approach. For this reason, the appraisal is a much more expensive approach than consulting with a friend or using the services of a REALTOR.
Although a friend may be the cheapest source for determining the value of a piece of real estate, the friend, most likely, will not be the best source.
Do you know what a REALTOR is? A REALTOR is a person who has chosen real estate as a career, became licensed as a real estate salesperson or broker in one or more states in the United States and has joined the membership of the NATIONAL ASSOCIATION OF REALTORS and the membership of a REALTOR’S organization in his/her locale. REALTORS generally do not perform appraisals of real estate but rather perform a comparative
market analysis, commonly referred to as a CMA. CMA’s are a variation of the Sales Comparison Approach used by the appraiser. A CMA does not include a Cost- Depreciation Approach or an Income Capitalization Approach, therefore, the charges for a CMA by a REALTOR are much less than the charges for an appraisal and in many instances, will be provided for free in the hope of listing or selling a piece of real estate.
The CMA generally provides sellers and buyers with an adequate amount of information for them to make an informed decision concerning the appropriateness of a proposed sale price or a purchase price.
To create a CMA that is useful to the seller or buyer, the REALTOR must collect accurate and sufficient data to minimize his/her error when using the data to recommend a sale price or purchase price.
The REALTOR must determine if one piece of real estate is truly comparable with another piece of real estate. This process involves more than just comparing the number of bedrooms, bathrooms and square footage each of the pieces of real estate includes. Factors such as the age of the improvements on each of the pieces of real estate, condition of the improvements on each of the pieces of real estate, whether the improvements on each of the pieces of real estate meet current local codes and the location of each of the pieces of real estate,
etc. must be taken into consideration. A REALTOR can generally produce a CMA that will provide a much more economical and sufficiently accurate valuation of a piece of real estate than the appraiser. However, in the selection of a REALTOR to providing a CMA, as with the selection of any professional, you must deal with
a reputable real estate brokerage company that holds its REALTORS to the highest of standards.
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