Home Appraisals
For most couples, the marital home represents the majority of their personal' net worth and therefore determining the market value of the property becomes an immediate focal point in creating a statement of assets. The most common method of determining the current market value of a residential property is the Comparative Market Analysis (CMA).
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The guidance of an experienced Realtor can be priceless and can even be the determining factor in not only whether the home sells quickly, but also whether the home sells for the highest price. Rejecting the advice of an experienced Realtor or trying to sell on your own can be costly, Either decision places in the balance one of the most valuable assets a person can own.
WHAT DETERMINES HOW A
HOME IS PRICED IN THE MARKET
There are typically 3 ways that a home's 'value' can be addressed, and familiarity with the real estate terms Comparative Market Analysis (CMA), Appraised Value and Tax Assessed Value are important. Knowing the difference can save disappointment and frustration and it allows the seller to engage meaningfully with the Realtor in setting a home's listing price as well ensuring that a fair and equitable value is established in the event of a divorce.
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For now, the Tax Assessed Value, which is the amount local taxing authorities have designated for a specific property. It frequently differs from the market value (CMA) or the appraisal value. For now we will leave this aside as it is not typically a factor in establishing the market value or listing price of the home due to the substantially different methodology used to derive it.
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Most sellers, especially those in the divorce process, are anxious to squeeze every dollar out of the marital home. In a divorce, this puts huge pressure on the listing agent to work with both sellers to set a price that will sell the property quickly. The graphic on the left shows many of the information sources a seller can reach out to to attempt to justify a price higher than the market can support.
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A Comparative Market Analysis (CMA) is an estimate of a home's market value based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers. Setting the right price is imperative to obtaining a quick sale but too often sellers feel that if the sale is quick they're leaving 'money on the table.' In real estate this is not the case. Statistics by the National Association of REALTORS® has demonstrated year-over-year that the first offer is all too often the best offer.
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The statistics shown in the graph on the right clearly show the importance in the first two weeks after a listing is published are the most critical for showings. Even in a relatively 'slow market' this is the time when the listing is new and fresh. Following this two week period the listing begins to growing stale and after 30 days it can be stigmatized by buyers and buyers agents that wonder what may be wrong with the house. Geni has a very effective strategy to keep her listings at the top of the page as if they were newly listed.
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Remember Economics 101: Price is what a Ready and Able buyer is Willing to pay and a seller is willing to accept.
COMPARATIVE MARKET ANALYSIS
THE ROLE OF THE CMA vs.
APPRAISAL AND HOME PRICING
A Home Appraisal is an evaluation of a property's worth performed by a licensed real estate appraiser at a a given point in time. Appraised value is determined only by similar homes (square footage, age, amenities, etc.) that were SOLD in the immediate area in the last 3 to 6 months.
If an appraised value is a obtained it will be a crucial, if not a deciding factor, in loan underwriting because it sets a limit to the lender on how much money may be borrowed. This limit is expressed as the Loan to Value (LTV) ratio based on the appraised value; where LTV is greater than 80%the lender generally will require the borrower to buy Private Mortgage Insurance (PMI). This insures only the lender in the event of a default on the mortgage.
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The graphic on the right shows how the price of the home can affect the interest level in buyers. This is by no means exact but is indicative of the way buyers typically react to the home price. The point to be made by this graph is that one does NOT start at the +15% and then come down but rather at the 'Market Value' to give your Realtor room to 'sell up' and obtain a higher price.
THE ROLE OF A CMA vs. APPRAISAL IN A DIVORCE
Generally, if both parties agree on the results of the Comparative Market Analysis the asset can be tallied on the Statement of Assets with the attorneys; however, if there is no agreement, then the second option is to obtain a property appraisal by a Licensed and Certified Appraiser.
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The Geni Manning Real Estate Group takes a proactive role when a client’s property is being appraised, whether seller or buyer. The appraisers that are part of our team are independent contractors, licensed by the State of Texas and therefore have no potential conflict of interest.
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Our goal is to ensure that the appraisal is as unbiased as possible. Because appraisals are used by a lender to establish a 'loan value' they can have a profound effect on the closing process up to and including derailing the entire sale. This is one of the more common outcomes of a home priced too far above market value.
A divorce situation may require an appraisal should the value of the Comparative Market Analysis prepared by the listing agent not be agreed upon by both parties. A licensed appraiser develops a 'Uniform Appraisal Report,' based on Fannie Mae criteria, and like a CMA uses recent sales of similar properties, current market trends, home’s features and amenities, overall repair status and other objective features observed. We do not recommend that an appraisal be done unless the parties are unable to come to an agreement because once the appraisal is performed it MUST be divulged to buyers which can hamper the Realtor from obtaining more than the listing price, if that depending on the appraisal.
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Depending on who is ordering the appraisal and what it is to be used for it could be a detailed walkthrough or a “drive-by” or “curb appraisal” in which the appraiser relies upon the pictures and amenities of the property in comparison to others in the neighborhood that are similar.
WHAT IS YOUR HOME'S VALUE?
If you are in the divorce process, and have a marital home you are deciding whether to sell or have one spouse retain, please contact us as the decision to keep or sell has many very long term impacts financially and emotionally. The decision must be anchored to a solid foundation and we are happy to help provide that to you. You can get a preliminary idea of your home value by clicking on this link to What Is My Home Worth?
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The QR Code to the right provides a link to one of the most robust MLS search engines available that will help you not only research recently sold homes near you but also look for other suitable homes you may wish to look at. The app links directly to Geni and her Team who will reach out to assist in your search.
Alternate Access to Geni's MOBILE ONLY
Real Estate App
IF A DIVORCE HAS YOU ON THAT LONG LONELY ROAD AGAIN
WE'RE HERE TO HELP YOU BACK TO YOUR PEACE & HARMONY
We're PROBLEM SOLVERS & Have Deep Bench Strength In Our Experts & Professionals from Attorneys to Financial Accountants & CPAs, to Certified Divorce Lending Specialists
to Residential Certified Divorce Specialists (CDS®) to Divorce Counselors and Mental Health Professionals Available.
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