Listings and Valuation (7 Hrs)

Objectives

Upon completion of this section, you should be able to:

1. Describe the process of preparing a Comparative Market Analysis (CMA).
2. Identify what types of data should be maintained in-house.
3. Explain what external data you will need and where to obtain it.

Comparative Market Analysis: An Introduction

A residential real estate licensee typically uses only the sales comparison approach when preparing a Comparative Market Analysis (CMA). To do this, you gather data from properties that are sold, sale pending, expired, and currently on the market, then compare that data to the subject property to arrive at a value estimate. As with an appraiser, you identify similar properties, then make additions and subtractions to the value of each comparable to account for differences in features between that comparable and the subject property.

Case Study: CMA versus an Appraisal

Harlen, a real estate licensee, meets the Smiths at a party. When they learn he is licensed, the Smiths ask him to appraise their home so they can refinance. Harlen responds by referring them to a certified appraiser.

This was the right call, and here is why the distinction matters:

• A CMA produces an estimated sales price based on comparable market data. A real estate licensee can prepare one.
• An appraisal is a more detailed, formal opinion of value. Only a licensed appraiser may perform one.
• A lender will not accept a CMA in place of a licensed appraisal for a refinance transaction.

Because Harlen is not qualified to perform an appraisal, and because a bank would not accept one from him regardless, directing the Smiths to a certified appraiser was both the correct and professional response.