COMPETITIVE MARKET ANALYSIS – CMA The competitive market analysis (CMA) is really a comparison analysis used by real estate agents to aid in determining a proper list price for a property.
The CMA provides information on similar properties that have been placed in the marketplace so that they can be compared with the property that is to be evaluated to determine an offering price. These comparables are often referred to as comps . CMA is NOT a formal appraisal.
CMA form (CMA-11) uses three categories of comparables: 1. Properties for sale now are usually a little overpriced. 2. Reported sale prior to (6) months gives a good estimated value of the property. 3. Expired listings prior to (6) months are usually overpriced properties. This is usually why they do not sell.
The on–market–now list merely indicates to an owner the prices that competitors (other owners) are asking for their products (homes). The reported–sold–past–six–months list is more valuable than the list of current properties on the market because it shows actual sale prices.
Adjustments to comparable properties should be made based upon the property that is the subject of the CMA. The adjusted price is known as the adjusted selling price .
#1 $450,000 #2 $425,000 Everything is the same but what you see in the pictures. #3 $475,000 How Much? Between $450,000 and $475,000
For example, you can obtain comps from the Boards of Realtors. If you are in the Orange County area, use: XMLS.WEB.SOCAL.COM It is possible to download information from a multiple listing service in a matter of minutes. The following is a list of the Multiple Listing Services. To use these databases you will need the login or public I.D. and password or private I.D.
An agent could be liable for damages if a CMA negligently omitted recent similar sales and used comparables that resulted in the owner selling a property for less than the fair market value.
BOARDS IN THE AREA Pacific West Realtors www.xmlsweb.socamls.com MRMLS www. immrls.com Victor Valley www. vvar.com Glendale MLS glendale.rapmls .com
Greater South Bay www.realtylife. com Greater Area www. desertareamls.com CLAW www.Brower.themls.com Desert Communities dcaormls.risco .net San Fernando Valley sca.jlsalliance.com
LISTINGS FORMS To complete a real estate transaction and use the proper real estate form, the agent needs to know what forms to use and obtain those forms. All real estate forms may be obtained from the internet, using a program called “Winforms”. You will need to be a member of the Board of Realtors to use “Winforms”.
Winforms is the program for forms for the California Association or Realtors (CAR). This program provides unlimited impressions of the agreements, contracts, disclosure and other forms used in any real estate transaction. You may fill out the form on the internet and have the form printed out, ready for the client to sign.
ESTIMATED SELLER’S PROCEEDS The seller will pay certain closing costs when the seller sells the property. The buyer will pay certain closing costs when the buyer buys the property
SALES PRICE By using the CMA the listing agent can determine the approximate selling price of the property.
ENCUMBRANCES An encumbrance is any thing that can affect the ownership of the property. Liens (Money encumbrances) Non-money encumbrances We will deal mostly with liens in estimating the cash proceeds.
The next step is to determine the estimated closing costs.
Reconveyance Fee (If existing loan is being paid off) Lender’s Demand or Beneficiary Statement Lender’s Document Fee Proration of Interest on Existing Loan Miscellaneous Fees Home Inspection Fee Buyers Cost Paid by the Seller Home Warranty Policy Real Estate Commission ______%
The sales commission cannot be a fixed percentage. It must be negotiated.
NOTES CARRIED When the seller carries back a note this will decease the amount of cash he will receive.
CALCULATING THE SELLER’S PROCEEDS Usually the calculation of the seller’s proceeds is computed with the aid of a computer. Here we are trying to explain to you what the computer does without providing all the charts and necessary facts needed to make the calculations correctly.
Example: Mr. Smith sold his home for $300,000. The commission is $18,000 and closing costs were $6,000. He had a 1 st trust deed of $124,000. He received no credits nor carried back any loans in this transaction. What are his net proceeds?
PURCHASE PRICE When purchasing a home, the buyer will have to pay certain closing costs to obtain the home before the close of escrow.
ESTIMATED BUYER’S COSTS When writing an offer to purchase a home, you should supply the buyer with the approximate costs to purchase the home. In the age of computers, this form is usually produced on the computer. In this class we will do it by hand.
POINTS A Origination Point is 1% of the Loan Amount, paid in cash. Usually used on purchase money loans (new financing). A Discount Point is 1% of the Loan Amount, and is then subtracted from the loan amount. Note: no money out of pocket. Usually used on hard money loans (refinancing).
PROPERTY TAX IMPOUND ACCOUNT CHART January 7 July 7 February 2 August 8 March 3 September 9 April 4 October 4 May 5 November 5 June 6 December 6
Example: Mr. Anderson closed escrow on the purchase of a home and closed escrow on April 15 this year. The purchase price is $200,000. Approximate his share of the property tax for impounds. Look up the perorations on the Property Tax Impound Account Chart: April 4 $200,000 X 0.0125 ÷ 12 x 4 = $833
Problem 1 Mr. Rooks closed escrow on the purchase of a home and closed escrow on July 10, this year. The purchase price is $250,000. Approximate his share of the property tax for impounds. July 7 $250,000 X 0.0125 ÷ 12 x 7 = $1,823
Problem 2 Mr. Parker closed escrow on the purchase of a home and closed escrow on September 2, this year. The purchase price is $300,000. Approximate his share of the property tax for impounds. September 9 $300,000 X 0.0125 ÷ 12 x 9 = $2,813
Problem 3. Mr. & Mrs. Anderson sold a home for $250,000. The closing costs were $5,000 and selling commission was $15,000. He had a first trust deed of $150,000. They received a credit of $5,000 on property taxes and carried back a $30,000 second trust deed. What are their net proceeds?
Problem 4. Mr. & Mrs. Ford sold a home for $200,000. The closing costs and commissions were $16,000. He had a first trust deed of $159,000. They carried back a $35,000 second trust deed. What are their net proceeds?
Problem 5: Mr. Green purchased a home for $250,000. The closing costs were $5,000. He paid $50,000 for the down payment. The loan cost is 1 point for the loan. How much does he need to close the loan?
Problem 6: Mr. Garcia purchased a home for $350,000. The closing cost were $7,000. He paid $70,000 for the down payment. The loan cost was 1½ points for the loan. How much does he need to close the loan?