MARKET ANALYSIS

Comparative Market Analysis

A Comparative Market Analysis (CMA) is a tool used by real estate agents to value a home. It evaluates similar homes that have recently sold in the same area. Agents find comparable sales and use them to conduct a sales comparison. In most cases, an agent will find three homes that have recently sold and are as similar to and located as close to the home being valued as possible. Each one is then analyzed to pinpoint differences between it and the home being valued. Once these differences are priced out, the price of each comp is adjusted to see what it would cost if it was identical to the home being valued were it to be sold in the current market.

APPRAISALS

Based on a Professional’s Opinion

An appraisal is an unbiased estimate of a home's value prepared by a licensed professional. Mortgage lenders often rely on appraisals when evaluating properties for purchase loans and refinances. In most cases, the lender orders the appraisal as part of the loan process.

During the appraisal, the appraiser conducts a thorough inspection of the property's interior and exterior, while also considering recent sales of comparable homes, market conditions, location, size, condition, and other factors that may influence value. The appraiser then prepares a detailed report that may include an exterior building sketch, photographs of the property, a map showing comparable sales, an explanation of the home's square footage, and supporting market data used to determine the final value.

REFINANCING

Lenders base the amount of their loans on the value of your property and usually allow you to borrow a maximum of 75% to 96.5% against your property. Knowing what your home is worth allows lenders to calculate your equity in the home. The more equity you have, the better terms you will receive on your refinance.

HOME IMPROVEMENTS

If you're considering home improvement projects to increase your property's value, it's important to understand which upgrades are most likely to resonate with buyers in your market. Not all improvements deliver the same return on investment, and the impact can vary significantly depending on your home's price point, location, and target buyer.

A professional home valuation can help you understand how your property compares to others in the area and identify opportunities where strategic improvements may enhance marketability and value. Whether you're preparing to sell in the near future or simply planning for the long term, understanding your home's position in the market can help you make more informed decisions about where to invest.

QUALIFYING FOR CREDIT

If you want to borrow cash against your home, getting a Home Equity Line of Credit (HELOC) could be a good option. To qualify, you must have a certain level of equity in your home. Most lenders require at least 20%. Getting a home valuation will help you determine if you qualify and will be used by the lender to make a decision on your loan.

PLANNING

Though it’s not a necessity, simply knowing the value of your home is good information to have. It will help you plan for the future and deal with unforeseen circumstances when you might be in a position that requires extra money or a quick relocation. Knowing how much equity you have in your home and how much you may be able to borrow against it or sell it for will help you respond to any financial curveballs that life throws at you.