One of the best ways to determine the accurate value of a property is to compare it with similar properties recently sold or listed on the market in the same area. Recently sold properties provide the best value estimation of a property.
This is because they reflect how much buyers are willing to pay on these properties under the same market conditions. For this reason, the comparative market analysis is the analysis of recently sold properties in order to determine how much a property can be listed or bought for in the same area.
Sometimes there are no sold properties in the area. In this case, you can estimate the value of the property by comparing it with similar listed properties in the same area. However, you will not get the accurate value.
This is because the listing price of a property does not reflect the value of the property. Instead, the listing price represents what the customer wishes to receive on the property.
Steps involved during the analysis
Steps used in comparative market analysis range from analyzing the neighborhood, analyzing the property, developing the initial comparative market analysis report, etc. Learn more about location analysis based on their classes. The following is a simple list you can refer to when making a comparative market analysis report. You can also learn more about property class analysis.
- Evaluation of the of neighborhood
- Evaluation of the original listing
- Evaluate the property value estimate
- Draft a preliminary comparative market analysis report
Benefits of comparative market analysis
Whether you are buying or selling a property, it is important to use the comparative market analysis. This will protect you from paying more money on the property or selling your property at a lower price. You can also use the appraisal to determine the value of a property. However, this might not be enough when calculation the actual value of property. Therefore, every information you can get will help you determine the best value of a property.
