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Have you ever wondered why the market value of your home differs from the lender ordered appraisal?  What value is being used to set and/or increase your property tax bill?  It’s easy to be confused about the different valuations being used in the home buying and selling process, but knowing a home’s marketable value will ensure a fair price.

There are generally three ways to determine the value of a home: through a Comparative Market Analysis, a professional appraisal or an asset valuation.  The Comparative Market Analysis (CMA) can determine a reasonable listing price for your home.  When Andrew Cherry prepares a CMA, he considers a number of factors including the home’s size, age, location and amenities. Andrew also researches the list prices of properties that are currently for sale, have recently sold, and or expired properties in your neighborhood.

Licensed appraisers, those used by a lender, determines the market value of your home by looking at the supply and demand of like properties in the area, comparing your property with others that have recently sold, determining the amount of money it would take to replace your home at current material / labor costs, and/or determining how much income a property would produce, this last approach is used more often for rental property, apartments and commercial property.  Lenders frequently require a professional appraisal upon which to base your loan amount. Local governments also perform independent appraisals to determine your home’s assessed value, available on public record, so that your property is taxed fairly, however, these appraisals are typically known as desk top appraisals where a physical inspection is not required.

When comparing the CMA and the appraised values, don’t be surprised if they do not match.  There are a number of reasons that these differences occur.

The “market value” determined by the appraisal can be different from the “market price” determined through a CMA.  The CMA is a forward projecting report designed to determine what a home is likely to sell for in a future date.  The appraisal is a backwards looking report, designed to determine what a similar home actually sold for over the last three to six months.

Typically, there is a 5% margin of error on both sides of either figure, meaning that the CMA and appraisal may have as much as a 10% total difference.

Andrew Cherry can help you determine the value of your home by researching and performing a Competitive Market Analysis.  He can also recommend professional appraisers.  Please call Andrew at 866.233.5262 to discuss current real estate conditions that affect the market price of your home.