Listings, Valuations and Negotiations

Objectives

Upon completion of this section, the student should be able to:

1. The process of preparing a Comparative Market Analysis (CMA). 
2. What types of data should be maintained in-house. 
3. What external data you will need and 
4. Where to obtain it.

Comparative Market Analysis - An Introduction

A residential real estate licensee typically uses only the sales comparison approach when valuing properties for a Comparative Market Analysis (CMA).  However, the licensee uses data from properties that are sold, sale pending, expired and currently on the market and compares this data to the subject property to derive a value.  As with the appraiser, similar properties are compared to the site property and additions and subtractions in value are made to the comparable properties to account for different features.

Case Study CMA versus an Appraisal

Harlen, a real estate licensee meets the Smiths at a party. Upon finding out that Harlen is a real estate licensee, the Smiths ask him to do an appraisal on their home so they can refinance. Harlen responds by referring the Smiths to a certified appraiser to value the home.

While Harlen can perform a Market Analysis on their home and estimate the sales price, he cannot perform an appraisal (which is a more detailed opinion of value and can only be performed by a licensed appraiser).  He made the correct choice in this situation since he is not qualified to perform an appraisal, nor would it be acceptable to a bank.