This document provides information on different methods for analyzing property value, including CMAs, appraisals, and BPOs. It discusses the key differences between these methods and how each is used. The document also outlines important factors to consider when compiling comparables, such as location, amenities, and necessary adjustments. Overall, it provides guidance on properly conducting a market evaluation to determine a property's value.

1. presents:

2. Market Evaluation – Analyzing PropertyMarket Evaluation – Analyzing Property
•CMA
•Appraisal
•BPO

3. CMACMA
Comparative Market Analysis
• A report that a real estate agent/broker compiles
to assist the seller in determining the proper list
price
• The report can also assist the buyer in
determining the proper offer price
Be careful when compiling comparables or
suggesting a property value

4. AppraisalAppraisal
• Typically used for:
– Taxation purposes
– To discover a possible
selling price
• Though a CMA and an
appraisal both use
comparables, only an
appraisal can be used
for lending purposes.

5. Broker Price OpinionBroker Price Opinion
Used to evaluate
property value.
Useful to a Lender
or Relocation
Co. to analyze
data in a format
they would like.
Not used for
Lending
purposes

6. QuestionQuestion
• Can licensed agents be paid for a BPO?
– Yes, must be paid through Principal Broker
– As long as the BPO is NOT used for lending purposes
• Do NOT collect payment for a BPO for:
– Loan Modifications?
– Tax Appeals?
– Refinancing?
•Loan Modifications
•Tax Appeals or
•Refinancing

7. Subject PropertySubject Property
• Gather the specifications of the subject
property.
– Lot square footage
– # of bedrooms
– # of bathrooms
– Age
– Style
– Garage
– Other amenities

8. Comparable PropertyComparable Property
• Subject Property
• Comparable Property

9. Comparable ApproachComparable Approach
• A good comparable is one that is most like the
subject property.
• For example:
– Within 12 blocks
– Similar style
– Within sq. foot range
– Amenities/Age
– Pool, garage, lot size

10. Comparable ApproachComparable Approach
• How do we value amenities?
– Pool
– Out buildings
– Block walls
– Stream bed
– Lake/Valley view
• Adjustments
– Pool or no pool
– Stream or no stream
• Location
– Corner Lot
– Next to a school or shopping center

11. Comparables in Changing MarketsComparables in Changing Markets
• Comparables are always sales in past, so they
may not always be the best indicator of value by
themselves.
• It may be necessary to adjust them by the
projected percentage of decline or appreciation.

12. The Real Estate FactorsThe Real Estate Factors
• How long does it take a property to sell?
• Will the property sell?
• Consider the following factors:
– Price
– Location
– Condition
– Financing
– Market Conditions
– Marketing

13. PricePrice
• An agent can make recommendations but the
seller is the only one can put a price on their
property

14. Pricing GridPricing Grid

16. LocationLocation
• The value and time on the market
has a lot to do with location
• Property by nature is scarce, so the most sought
after property holds the highest value

17. ConditionCondition
• A well maintained property will
draw more buyers
• When additional fund must be invested in the
property due to poor maintenance, the value is
effected and could limit the number of buyers
 Seller may choose to invest
monies into improving the property
or leave it as is.

18. ABC News Story- Appraisal Makeover
• Tips for Homeowners to improve an Appraiser’s
opinion on value.
• Broadcast on ABC News Sept. 2012
(Click to view video clip)

19. 48 Hour Appraisal Makeover Video Clip

20. FinancingFinancing
• The more financing options available, the larger
the buyer pool.
• Some properties are difficult to finance and may
take a unique buyer therefore they may take
much longer to sell
• Neither seller nor agent have any
control over this factor

21. Market ConditionsMarket Conditions
• When the number of homes increases, value
decreases and time on the market increases
• Market conditions can vary from one area to
another
• Neither seller nor agent have any control over
this factor
 When the number of
homes decreases, value
increases and time on
the market decrease

22. Two Types of Markets:

23. MarketingMarketing
• Advertising an available property is essential to:
– Whether or not it sells
– How much it sells for
– How long it will take to sell
• Reaching a wider pool of buyers will insure the
best buyer is found
• The real estate agent has a lot of control over this
factor
• It is important to accurately explain to the seller
what marketing efforts will be done

24. FactorsFactors
• Agent should only be responsible for what the
agent can control
• Agents only have limited control over the sell
process
• Agents have control
over very few factors

25. Property Tax AssessmentProperty Tax Assessment
• In most places, property is assessed as a way to
tax property owners relative to the value of the
property
• It’s always a good idea to review the assessor’s
evaluation
• Many times the values will be off from actual
market value but it’s good to know if the
evaluation is in the “ball park”
• Never rely solely on the assessors opinion

26. Foreclosed/Bank Owned PropertyForeclosed/Bank Owned Property
• These properties typically sell for less than seller
owned properties
• If a comparable is a Bank Owned property, this
needs to be considered and may require
adjusting

27. Buyer PoolBuyer Pool
• The amount of buyers that are currently willing
and able that are looking for a type of property
similar to the subject property
• The larger the buyer pool the fewer days a
property will be on the market
• What kinds of property have large Buyer Pools?
• What kind of properties have small Buyer Pools?

28. Days on MarketDays on Market
• Usually this refers to the time between active
status on the MLS and the time the property goes
under contract
© 2010 Stringham Schools

29. Percentage of List PricePercentage of List Price
• Concessions?
• Original List Price?
$100,000 List Price
$ 95,000 Sold Price$ 90,000 Adjusted Price
$ 85,000 Sold Price
$ 5,000 in Concessions

30. Price per Square FootPrice per Square Foot
• Simply makes price adjustments by the size of
the property.
• It does not take into consideration the quality or
effective age of the property.
• Is higher in areas that are most sought after and
lower in the least desirable areas.
• Can be more effective way of comparing in new
construction properties.

31. Buyer’s PerspectiveBuyer’s Perspective
• It may help to look at value through the eyes of
the buyer.
• Buyers often look at houses of all styles, ages
and sizes in areas they like.
• Pay attention to where you are priced and how
that relates to how buyers and agents do property
searches.

32. The Stepping Stone ProcessThe Stepping Stone Process
• Buyers
typically shop
all of the
properties that
fit their criteria
and will select
the house that
is the best
deal.

33. How Many go Under Contract?
Active Comparables
+ Under Contracts
Total
Total ÷ Under Contracts =
% of homes going
Under Contract monthly

34. Study the Market ResponseStudy the Market Response
• No matter how great research is, putting a house
on the market is the best way of evaluating how
real buyers respond.
– How many inquiries have there been?
– How many initial showings?
– How many of these buyers came back for a second
look?
• This information is very valuable to sellers who
are trying to make good decisions about price.