Determining Value in an Advanced Market Analysis

What Factors Influence Property Value?

Most of us intuitively know that property values are influenced by many factors, with location representing the primary influence on value. This is why the popular mantra "Location, Location, Location" is so popular in describing the importance of location in real estate.

However, there are many other factors which influence value, and properly accounting for each of these characteristics is vital in the preparation of any opinion of price. This is why the simple price per square foot methodology utilized by many brokers, buyers, and sellers can lead to significant errors.

Values are influenced tremendously by differing :

Site & view characteristics
Design and appeal characteristics
Construction quality
Age/condition
Improvement size
Amenities
Terms and sales concessions
Income generating potential of the property

To properly and accurately value a property, it is necessary to consider and account for each of these individual characteristics. The rates of adjustment assigned to comparable sales and listings are derived from analysis of past sales in the subject marketplace. This is where the knowledge, expertise, and experience of the Broker is of utmost importance, and this is where our Appraiser/Brokers excel.

Anyone can provide an opinion of price on a property, but not everyone can provide an in-depth professional report which analyzes the subject property and it's marketplace. Don't take the pricing of your property light heartedly. Hire a professional to do the job.

Does an Advanced Market Analysis assign a single value to the property?

No! A single value does not reflect the differing motivations and actions of buyers and sellers. Nor does it reflect the variability of the marketplace. Markets are not perfect, but they are usually predictable within a certain variation. Changing market conditions and varying degrees of motivation (which is influenced by greed and fear) reflect a range of market value for any property. Unfortunately, the lending and legal professions have required that a single final value be assigned to a property in an appraisal. However, for lending purposes, most markets perform differently.

Motivated Buyers & Sellers

In some situations, sellers like to try to achieve a maximum return on their property. In other instances, sellers need to sell quickly and pricing a property so that it will sell fast is of utmost importance. Usually, sellers are looking to sell at the most probable sales price within a reasonable marketing period. The Advanced Market Analysis provides sellers with the data and analysis to determine the correct asking price and anticipated selling price for their particular needs and goals.

3 Price Ranges for Differing Seller Goals & Motivations

The Advanced Market Analysis provides sellers with three different pricing options and suggested asking prices which depict the influence of these differing motivations relative to the appeal characteristics of the property. After a thorough analysis comparing the subject property with recent sales and current competitive listings, we will provide a range of suggested list prices for three different client motivations:

The most likely selling price
A motivated seller who needs to sell within a short time frame
A seller who's goal is to maximize value and is willing to take on the risk of a lengthy marketing time to achieve this goal.

What if you do not agree with the Broker's pricing opinion?

The Advanced CMA includes detailed information on the data, methodology, and analysis utilized in the valuation. This documentation allows the user of the report to follow our methodology and thought processes. If the reader does not agree with our opinions and conclusions on the value of a particular characteristic compared to a competing comparable, they have the data necessary to adjust the sales as they see fit.

After all, part of this service is providing the factual data, and the other part involves the Brokers opinion of value. If you do not agree with our opinions, we provide the data necessary to value the property based on the seller's own judgement.

For example, a comparable sale may be used which is similar to the subject property in all regards except for a less private setting and inferior views. The Broker has accounted for this comparable sale's inferiority by adjusting the comparable sale upward. The seller may believe that this inferiority requires an even larger adjustment. The seller may take this factor into consideration, and price their property at a higher level. While this may differ from the Broker's judgement, this service provides sellers with the information necessary to make informed decisions.

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