A comparative Market Value Analysis or "CMA" in Realtor speak is a Broker price opinion based on the current real estate Market in Williamstown or the Berkshires or your real estate location. "Your location" is the key word here. The same home in Palm Springs Florida may sell for far more than a similar home in Hancock MA. Location is everything in the real estate market. While homes in the Berkshires and Williamstown, Stockbridge, Lenox, and Great Barrington. Key points to keep in mind when you imagine how much your house is worth are
- How many jobs does your town area offer- right now
- What are the demographics of the community- young families, retirees, and careerists
- How many homes are on the market right now
What is the least important fact when you imagine how much your home is worth?
- Current listing price of homes in your neighborhood (meaning the how much is the "for sale "amount on homes still for sale- which can be 8-36% higher than what the home will eventually sell for)
- What you paid for your home, what improvements you made when you bought the home
What is the most important piece of information to keep in mind when you imagine how much your home is worth?
- What have homes sold for in your neighborhood within the past 12 months (not in 2007 when real estate experts claim the housing market bubble was a the top of the boom)
The four values that a Broker or professional may discuss with you...
- Market Value- the most probable price that a property should sell for in the current competitive and open market. Market value depends on what a buyer is willing to pay in the current real estate market. Suppose you owned a BMW car lot with 15 used BMW vehicles all in excellent condition. Colors may vary, options may vary and sticker price may vary. However, the bottom line in sales is what is important to the buyer- If price of the vehicle is the bottom line for the buyer, the cheapest BMW will be snapped up. If the buyer is insisting on a BMW loaded with options then the vehicle with the most options for a price within reason will sell first. Bottom line is the buyer will determine which vehicles sell and how quickly they sell. The same is true of real estate. The seller of BMWs may want top dollar and that would be possible if the car lot owner had only one BMW and it was the only one in town. Not true in vehicles and not true in real estate in 2011.
- As-Is Value- no frills included, the property is being sold exactly as it is. What you see is what you get. The end. This price will usually be much lower than the Market value and it may be possible to negotiate it lower.
- As-Repaired Value- This is a tricky one. The appraiser or broker may place a value on the cost of repairing the issues found during the home inspection. After the recommended repairs, the house should be in turnkey condition. Problem with this one is that after you make the improvement the home may still sit on the market for a while. A good thing about this one is that you can negotiate with the buyer and perhaps lower the price if the buyer will do the repairs themselves.
- Quick-Sale -Value- This value is below the current market value and usually indicates the buyer needs to immediately liquidate the property or the property is in foreclosure. This value may be considered if the buyer has immediate need of cash, has already purchased another home, or if the buyer has moved to another state and does not want to continue carrying the cost of two homes.
- Conservative real estate experts estimate that 1% per month of a home's value is the actual carrying cost for an empty home. If you home is worth $200,000 then 1% per month translates to expenditures per year of $24,000 per year. If the home is on the market for 3 years then the owner has lost $72,000 in carrying cost. Meaning actual value received upon selling for $200,000 minus the $72,000 to hold the home 3 years = $128,000. That is a 36% loss of value.
The best advice your agent can give you is to have your home appraised prior to putting it on the market. The cost can range from $300-$450 and is well worth the time and effort. The number one reason homes do not sell is that they are overpriced for the current market. Priced right is half sold!