The Difference Between a Home Valuation & a Property Appraisal
When you want to know what your home is worth, it’s easy to get confused between a home valuation and a property appraisal. Though they may seem to be the same thing, and in a lot of ways are very similar, there are some very important differences between the two you’ll want to know in order to better understand the value being determined.
What is a Comparative Market Analysis?
A Comparative Market Analysis, also simply known as a CMA, is a method of property valuation completed by real estate professionals used to estimate the value of residential properties. Your REALTOR® will examine previously sold properties with similar features in your area to create a report to help you determine a realistic listing price for your home buyers may be willing to pay. A typical CMA report will include:
3-5 comparables, including:
A description of each property, including elevation, floor plan, and the number of bedrooms and bathrooms
The square footage of each property
The sale price of each
Dollar adjustments for any differences
The adjusted sold price per square foot of each property
The fair market value of your property based on these comparables
Moreover than just comparing the prices of recently sold homes in the area, your REALTOR® will also take into consideration the following:
- Nearby Amenities
It’s important to understand that while your CMA is used to decide on a fair selling price, is not an official property appraisal. It hasn’t been prepared by a licensed real estate appraiser, doesn’t typically comply with appraisal standards, shouldn’t be relied on as an appraisal, and can’t be used for financing, civil proceedings, income tax purposes, or financial reporting purposes.
What is a Home Appraisal?
A property appraisal is an unbiased professional opinion of a home’s value, almost always used in real estate transactions and commonly used in refinancing a home. In a real estate transaction, a home appraisal is used to determine whether the home’s contract price is appropriate given the home’s condition, location, and features. In a refinance transaction, an appraisal assures the lender that it isn’t handing the borrower more money than the home is worth.
Similar to a comparative market analysis, a property’s appraisal value is influenced by recent sales of similar properties and by current market trends. The home’s features, the number of bedrooms and bathrooms, floor plan functionality, and square footage are also key factors in assessing the home’s value. The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property’s value, such as needed repairs, in an official appraisal report.
This report will include:
- A street map showing the appraised property and comparable sales used
- An explanation of how the square footage was calculated
- Photographs of the home’s front, back, and surrounding area
- Front exterior photographs of each comparable property used
- Other pertinent information—such as market sales data, public land records, and public tax records that the appraiser requires to determine the property’s fair market value
Licensed real estate appraisers require special training and experience before they become full appraisers. Their methods for providing an appraisal go beyond using the sold prices of similar properties to arrive at an appropriate listing price.
The Bottom Line
It is a seller’s agent that will perform a free comparative market analysis in order to decide on the listing price they will use when marketing your home, while a buyer’s lender will usually be the one who requires an independent appraisal on a property. Simply put, the lender wants to make sure the property is worth what the buyer is paying for it. Just because other homes nearby have sold for a similar amount, it doesn’t mean a lender will be satisfied the home is worth what the buyer is paying for it. This way, if the buyer were to default on the mortgage and the property were to go into foreclosure, the lender wants to make sure it can recoup the money it has lent on the property. The lender will be more confident in its lending by reviewing an appraisal for the property.
5 Reasons to Sell Your Home in Summer 2020
Earlier this year, with the statistics forecasting our best year yet, no one could have imagined the impact of COVID-19 on the Saskatoon real estate market. Self-isolation and social distancing were things we had never even dreamed of and they quickly became our reality without much warning. Soon after, the market slowed dramatically, leaving both buyers and sellers worried what the future would hold.
Luckily, though, the warmer weather brought with it a sunnier outlook, and as recoveries continue to rise, so do sales. This means, if you’ve been toying with the idea of selling your home in 2020, this summer is a fantastic time to do so—and here’s why:
#1 – Awesomely Low Interest Rates
With the current economic climate in the state that it is due to COVID-19, the current interest rates for mortgages are at a record low—some even reported to be as low as 1.99% on a 5-year fixed term! Because of these low interest rates, more home buyers are entering the market equipped with more buying power than they previously could have afforded. So, if you were to list your home today, there would be more potentially interested buyers to sell to—so you could kiss those worries of never-ending relists goodbye!
#2 – Fewer Listings, Less Competition
Saskatoon, as of today, is in what we’d call a seller’s market. While more and more buyers are flocking to the market with the low interest rates, the same is not being said for new listings. This lack of inventory in the Saskatoon market means those listings that do exist are getting more action than ever before, with quite a few of them pulling in competing offers. As a seller putting your home on the market today, you can expect to see more urgency from buyers and a shorter listing period. And why not turn your dreams of a new home into a reality much quicker!
#3 – You Have A Clearer Idea of Your Wants & Needs
After months of social distancing and staying home to stay safe, I can almost guarantee that you have gotten pretty familiar with your current home. More specifically, I’d say you’ve gotten pretty familiar with what it’s missing for you and your family. This means that you’ll have a clearer idea of what you’ll be looking for in your new property, helping to narrow down your choices to make finding your dream home simpler and less like digging through the clearance rack to find a gem!
#4 – No School Means Easier Moves
Summer is traditionally one of the best times for families to move, with kids out of school and summer vacation times more readily available. Not only will you have the extra free hands to help carry the boxes, but you also won’t have to worry about disrupting their learning process or moving them out of the school district before the year is through! Plus, a move earlier in the season gives them plenty of time to explore and fall in love with your new home just as much as you have!
#5 – Summer is the Best Time for Curb Appeal
Curb appeal is the first impression that buyers get of a home. And in the winter, when everything is coated in a blanket of wet and white, it’s hard for them to get an accurate read of what the curb appeal actually is. The trees are bare, the garden is covered, and they have no idea if there’s any grass under there at all.
In the summer, though, nature is in bloom, the weather is warm, and your home can truly be seen in its best light (mostly because there is still light after buyers get off work). This helps to reinforce a buyer’s impression of the house, giving them another determining factor to help them make their decision, rather than leaving them in the mysteries of the unknown.
With plenty of buyers on the market, eager to get out and get moving while the water’s warm, summer 2020 is really shaping out to be a great time to be a seller. And if you’ve been questioning whether or not to get started, take this as your sign from the heavens—your time is now. And I can help! Contact me to get your free custom market evaluation today and let’s get started!