Using a third-party source to understand the value of a real estate property is strongly recommended for most real estate purchases and sales, but appraisals can be costly and often time-consuming. The element of time is important when others are making offers for a property you wish to purchase; or when it’s important for you to list a property for sale in a timely manner and at the right price. Obtaining a clear understanding of the value of a specific property prior to ordering an appraisal is, therefore, a key for the successful sale or purchase of real estate. This will enable you to make a well-informed and intelligent decision concerning the property.
Consider the source! While it is helpful to obtain an estimate of value from the listing broker or agent, it is strongly advisable to obtain an estimate from a third-party entity that is not related in any way to the proposed transaction or the property, for obvious reasons. An unbiased opinion of value can be fast, professional, very affordable (less than $20 in many cases), and can help you establish the right price to list your property or to purchase a property effectively.
For residential properties, the comparative market analysis (CMA) report assesses comparable properties within the immediate market to obtain the value of the subject property. The commercial value analysis (CVA) examines the income, expenses, taxes, vacancy rate, capitalization rate and other financial information of income-producing properties to obtain the market value of the property as an investment or performing asset. Both approaches can be extremely accurate methods of real estate property valuation if performed correctly. They are also much more affordable and are typically obtained much faster than appraisals.
While both of the above approaches can be performed by the consumer, non real estate professionals, the buyer, or the seller themselves; it is always advisable to obtain a report of value from a third-party, unbiased, real estate professional because a third-party report can be a much more effective tool for financing, listing, purchase price negotiations, prospecting, development planning, etc. There are a number of free online sources that can assist in assessing comparable properties in your market that are currently for sale and/or have recently sold; However, a professional, third-party CMA or CVA can help establish a clearer understanding of the actual value of the subject property within its specific market. A third-party valuation report is advisable for comparing the value provided by the seller, listing broker or your own real estate agent. It is also useful when establishing a price to sell your property, and when considering any purchase, sale, investment, or development planning for any and all real estate properties.