How much your home worth? Are you planning on buying an investment property and need to know the value? You can find out by doing a Market Analysis also known as a Comparable Market Analysis. Real estate brokers & realtors use this technique every single day to evaluate properties. Now you will learn how to evaluate any home or any type of real estate in our school.
What is Comparable Market Analysis
You may also hear the term CMA which is Comparable Market Analysis this is an evaluation of how much a property is worth at the current moment. How much a person would be willing to pay for it in today’s market. this should not be confused with the Tax Appraised Value.
CMA vs Tax Appraised Value
A market analysis is what the property will sell for in today’s current market. The state is in a price all this state or a city does to issue taxes. Both valuations can be very different especially in dense city areas.
What To Look At When Building Your Market Analysis
- Define your market area. Make it very small, take a specific section of the subdivision if necessary.
- The quality of schools within your market area has a big effect on your analysis. The better the schools, the higher the home value.
- Make sure you compare homes of the same type. For instance, divide them into a single family, townhome, or condo.
- Similarly, compare homes according to the years of construction and renovations performed.
- Square footage is super important. You can’t compare the values of homes with a huge difference in lot square footage or building square footage or living square footage. This all weighs in your value.
- Also, the ratio of the number of bedrooms, bathrooms, and car spaces in the garages versus the square footage says a lot about the dimensions of the rooms and their convenience.
Defining the Market Area
Now we must define the area that is comparable to the home. Try not to use ZIP code tools or radios tools as they can hurt us when gathering data. This is because you end up leaving out important comps or including irrelevant comps. To make an informed decision, we use a Pinpoint Plot Tool. If you don’t know the neighborhood call some realtors that master that area.
Investigate for oddities
Sometimes, great deals come with hidden oddity. You want to stay away of anything that is weird, hard to sell. Although you may also consider lowering the value due to such oddities, which may include:
- Busy streets/heavy traffic
- Bad layouts/tiny rooms
- Bad neighbors: dirty, smelly, loud neighbors or neighbors running businesses
- HOA/ Maintenance fees
- Flood zone/ flooded property
- Somebody died mysteriously/murdered inside the house
Why Not Using Zillow or Trulia for CMA Comparable Market Analysis?
Trulia or Zillow as well as many other companies deal with large amounts of data. they do the best with what they have but it’s impossible for them to get the right value because of how different each neighborhood is, the proximity to other neighborhoods, whether these are good or bad, and the different values that can exist in the same neighborhood.