Definition 1 of 77
When you help sellers price their property, you should have two goals in mind.
One goal is, of course, accuracy.
You want the listing price to closely reflect the property's true value.
You don't want the listing price to be too high or too low.
A secondary goal is to be able to explain to the sellers just how you came up with your
suggestion for a listing price.
Suppose you come up with what you believe to be a reasonable price, but your sellers think
your listing price is too low.
How do you defend your opinion to the sellers?
Unless you can back up your estimate with supporting data, you run the risk of losing your
sellers' good will and your credibility, not to mention the listing.
Competitive Market Analysis 3
Site analysis
Competitive Market Analysis 2
Competitive Market Analysis 7
,Definition 2 of 77
Evaluate the degree of homeownership in the neighborhood.
Check to see whether the majority of the homes are owner-occupied or rentals.
Owner-occupied homes tend to be better-maintained than rental properties, and they hold
their value better.
Neighborhoods where the properties are predominantly rental homes tend to deteriorate
more quickly.
The Problem Of A Low Appraisal
Reputation
Owner-occupancy
Stability
Definition 3 of 77
A sale under normal conditions means that the parties are unrelated, both parties understand
the property's merits and shortcomings, neither party is acting under unusual pressure, and the
property has been exposed on the open market for a reasonable length of time.
Only a sale that took place under normal conditions may be used as a comparable.
Severe recession
Normal conditions
Increased readiness-watch conditions
Governmental influences
,Definition 4 of 77
Make sure you find out what schools serve the neighborhood.
For many potential buyers, the quality of the neighborhood schools is extremely important.
Also check on the other public services available.
Does the neighborhood have adequate police and fire protection?
How about public transportation?
Date of sale
Site analysis
Principle of substitution
Schools & Public Services
Definition 5 of 77
Financing is referred to as cash equivalent if the terms of the financing are standard for the
community and do not affect the price paid for the property.
If the financing terms were standard for the community and did not affect the price paid for
the property, the financing is referred to as cash equivalent.
Bank reconciliation
Bank loan
Market value
Cash equivalent
, Definition 6 of 77
A transaction between two parties that have no relationship with each other and who are
negotiating on behalf of their own best interests.
A fairly negotiated transaction and reasonably representative of market value.
How to prepare a CMA
Shape of the lot
Arm's length transaction
Other considerations
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