Market Analysis

Do you know how much your property is worth? The typical property owner has some idea of the approximate value of their property, but most don’t have a definitive answer to that question. Some rely on what the county assessor says it’s worth, even though in many cases the actual sales price is nowhere close to that figure. Others poke around on websites such as Zillow to estimate the value of their property, even though Zillow has earned a reputation for being inaccurate. So, how can you tell what your property is worth?

There are many Realtors® who advertise that they will perform a free market analysis, as if every other Realtor® charges a fee for such services. The fact is, most Realtors® offer a free market analysis as a way of making a connection with a potential seller. In many cases, they have the opportunity to develop a relationship that may turn into future income, so they are willing to expend the time and energy on that possibility. Most successful Realtors® charge at least a nominal fee if the market analysis is not likely to lead to future business, such as valuations for estates or family transfers.

A Comparable Market Analysis (CMA) is much like an appraisal, except that the Realtor® is not bound by conventional lending rules and often has the flexibility to factor in the dynamics of a changing market. An appraiser is strictly bound to recent past sales and a tightly restricted geographical area. When performing a CMA, a Realtor® studies comparable properties to evaluate amenities, condition, price (sold, pending, or active), location, acreage size, and other relevant factors in order to form an opinion of value.

Remember that an appraisal or a market analysis is not fact. They truly are an opinion of value. It is quite common for a prospective seller to request a market analysis from several sources (often as a way to interview Realtors®), only to find that each has a differing opinion.

Some sellers make the mistake of choosing a Realtor® simply because their CMA value is the highest, rather than evaluating the quality of the information and the résumé of the Realtor®. After all, the seller should set the price, not the Realtor®! Sellers can average these opinions to establish a fairly reliable range of value and then determine which agent is the best fit. Ultimately, the best negotiator is more likely to achieve the best sales price.