Term
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Definition
comparative market analysis, also referred to as a competitive market analysis and a broker's opinion of value
A CMA is similar to, but it is not, an appraisal. A CMA is performed by a listing agent to give the seller information about the sales prices of similar homes and the list price of competing properties, so the seller can decide how much to ask for the property. |
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Definition
| Cannot perform an independent appraisal; must work under the supervision of a licensed appraiser. |
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Term
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Definition
| Allows appraisal of both residential and non-residential properties with restrictions on complexity and value of the property. |
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Term
| State Certified Residential Appraiser |
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Definition
| Allows appraisal of residential properties with no restrictions and non-residential properties with restrictions on value. |
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| State Certified General Appraiser |
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Definition
| Allows appraisal of all property types with no restrictions. |
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Definition
| there is no relationship between the buyer and seller |
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Term
| Non-arm's length (NAL) transactions are |
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Definition
| purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property. |
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Term
| what is the Sales Comparison Approach (also called Market Data Approach) in regards to appraisals? |
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Definition
| Appraisers use this method for appraising residential property or vacant land. Based on the principle of substitution, this approach compares the subject property to similar properties and makes adjustments based on the date of the sale, the location, the physical features, and/or amenities. It is this approach that is reflected in the CMA or broker's opinion. |
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| what is the cost approach in regards to appraisals?? |
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Definition
| This method is most reliable for properties that were built recently since the appraiser can look at the actual costs of the development and construction. It is also a good approach for special purpose buildings when there are no comparable sales or data on income. |
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| what is the Income Capitalization Approach in regards to appraisals? |
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Definition
| Appraisers use this method to estimate the value of properties that produce income, usually from rent paid on leases. This approach assumes that an investor will purchase a property based on the future income stream the property will produce. This approach also assumes that an investor will not pay any more for a property with a certain income than he or she would pay for a similar property with a similar income-- the substitution principle again. |
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Term
| The sales comparison approach is also known as |
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Definition
| the market data approach. it's used for almost all properties. It also serves as the basis for a broker's opinion of value, or Comparative Market Analysis (CMA) |
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Term
| what are the steps in sales comparison approach? |
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Definition
The sales comparison approach consists of comparing sale prices of recently sold properties that are comparable with the subject, and making dollar adjustments to the price of each comparable to account for competitive differences with the subject. After identifying the adjusted value of each comparable, the appraiser weights the reliability of each comparable and the factors underlying how the adjustments were made. The weighting yields a final value range based on the most reliable factors in the analysis.
Identify comparable sales.
Compare comparables to the subject and make adjustments to comparables.
Weight values indicated by adjusted comparables for the final value estimate of the subject. |
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Term
| what are the steps in CMA process? |
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Definition
Collect and analyze information about the seller's property.
Choose comparable properties in the area.
Compare the seller's property to the comparables and do some adjusting to the value of the comparables.
Estimate a reasonable and realistic selling price for the seller's property. |
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Term
| what is property conformity in regards to CMA? |
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Definition
| A rustic log cabin located at the foothills of a mountain in the state of Utah might certainly be very attractive and inviting. However, that same house located in downtown Chicago might be viewed as an oddity and eyesore. A home that does not conform to the rest of the area creates a loss in market value. |
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| what are amenities when it comes to CMA? |
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Definition
| Amenities can vary widely from one home to another. Consider the situation where there are two four-bedroom homes in the same neighborhood with the exact floor plan. Either of the homes may have amenities the other does not, such as a swimming pool, outdoor living space, sauna, home theater, etc. These all play a part in the home's "condition." |
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Term
| True or false: licensees: if interested in purchasing a property you are listing, do NOT provide a CMA. Also, remember that you cannot purchase that property while you have it listed. |
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Definition
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Term
| To qualify as a comparable in an appraisal, a property must: |
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Definition
resemble the subject in size, shape, design, utility and location
have sold recently, generally within six months of the appraisal
have sold in an arm's-length transaction |
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Term
| Since a CMA is not an appraisal, a licensee has more latitude than an appraiser in the selection of comparables and may use properties that are similar to the subject and: |
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Definition
have sold recently
are pending sales
are active listings
are expired listings |
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Term
| when adjusting comparables, if the comparable is better than the subject in some characteristic, then... |
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Definition
| an amount is deducted from the sale price of the comparable. This neutralizes the comparable's competitive advantage in an adjustment category. |
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Term
| when doing a CMA, If the comparable is inferior to the subject in some characteristic... |
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Definition
| an amount is added to the price of the comparable. This adjustment equalizes the subject's competitive advantage in this area. |
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Term
| As a rule, the reliability of one comparable is greater than that of another if |
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Definition
the total number of adjustments is fewer
the adjustment amounts are smaller
the total adjustment amount is less. |
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