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Real Estate Valuation

21 Apr

 

Comparative Market Analysis (CMA) verses Automated Valuation Models (AVM)

As the technological changes within the Real Estate industry continue to improve we must embrace those changes that help us to better enhance and streamline the process. At the same time we need to ensure the improvements and enhancements reflect what is true and accurate.

 A good example of this is in the accurate valuation of Real Estate. For those of us Realtor’s and Brokers who have been in the business for 20 plus years we have seen technology dramatically change our industry and for the most part it’s been for the better. One of the most frequent questions that I am asked by sellers is; how much is my property worth? The same question is often asked by the buyer but it is usually asked this way; am I paying too much for the property?

As Realtors and Brokers we have used a method called the Comparative Market Analysis or CMA to answer these questions. Typically we research those homes in the area of our subject property that have recently sold or are currently on the market. We research like for like amenities, square footage, lot size, age and a number of other features, along with neighborhood factors to arrive at a price that would be similar or “comparable” to the subject. The process involves primarily a lot of electronic research using our MLS (Multiple Listing Service) along with County Tax records and other public information. In some cases it may involve further research that requires an area expert or knowledge that just can’t be found electronically. In most cases a lot of work goes into determining an accurate price for the subject property and it really does require an expert in the field if you want to do it right.

In the last several years we have witnessed “other” type of valuation models that have been developed to determine Real Estate value. I often am asked if these AVM’s (Automated Valuation Models) are accurate and all I can say is you should weigh out your options and consider the source. I have seen these types of “Automated Valuations” have a price that varies as much as 20% in either direction (both high and low) from what the comparable sales actually show. For me that is just too much of a variation and I would trust an expert over an “automated” system that may not have all of the relevant and accurate data.

As we embrace this new technology we need to recognize that there will be times when the AVM (Automated Valuation Model) will work for some consumers. For me however there is just no replacement for an experienced Realtor or Broker who knows how to accurately research the value of a particular property. I still provide a CMA to a seller at no cost or obligation and will provide the same information to the buyer at no cost. Why not call me and make sure that a professional expert is with you every step of the way. I can be reached via e-mail (mike.southwick@c21selectrealestate.com). I am an expert in multiple geographical locations and if I can’t help you, I network with a team of Realtors and Brokers throughout the country who are prepared to assist you. It’s a free call and no obligation unless and until you are satisfied with what you hear.

Written by Mike Southwick

Use only by permission

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Posted by on April 21, 2011 in Real Estate News

 

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