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Only a California licensed, trained appraiser, with no interest in a property, can do a legitimate appraisal in California. An appraisal looks at properties that are comparable which have sold in the last six months. Appraisals are being reviewed by lenders more than ever now, because market conditions in California are declining so fast. To be similar it should have very similar square feet, same acreage, same age, same school district, and be in a similar neighborhood. 

Sometimes in California, it is hard to find an exact match, so the comparable properties are adjusted to more closely match the subject property.  Adjustments take the form of placing a value on square feet, bedrooms, baths, and acreage, and then adding or subtracting value so that a more exact comparison can be made. In addition, the appraiser looks at the current condition of the subject property and will adjust its value to reflect its depreciation. Because there is judgment involved in making these adjustments, even appraisals using the same properties for comparison can vary in their result.  

As a rule of thumb, a seller will never get a their money back for what they put in to finishing the basement or walkout.  So if you are going to spend the money and time on finishing your lower level, do it for your enjoyment and pleasure, not as an investment.  

Comparative Market Analysis (CMA)

A comparative market analysis, or CMA, is an informal assessment of a property's market value, usually done by a licensed California real estate agent.  The evaluation, is based on local active listings in the market, (your competition) and sales data, to determine the probable sale price of a property in the current market. Sellers can use a CMA to help decide on a fair list price. Buyers can use a CMA to help them decide what to offer on a home they want to buy.

The accuracy of the analysis will depend in part on the quality of the data. The more houses a Realtor sells, obviously the better idea they will have on the market value of your home. Until recently the listings used for comparison were ideally to be located in the same neighborhood.  Now because of the current market conditions you should compare homes all over your community, because buyers are not stuck on any one particular neighborhood, they are shopping for the best value in every community.  

Realtors who are active in the market also have another advantage. They have usually had the chance to view the homes which have sold and are for sale. Based on having seen a home, they can easily decide if it really is comparable. Appraisers do not go to open houses and do not place any weight on house style and street appeal. This limits them in some ways. House purchases, like almost all purchases, are made on an emotional basis, even though the purchase is usually justified on an intellectual basis. As a result of the different approaches, appraisals often have different results than CMAs. The difference can make an appraisal come out higher or lower than a CMA. 

Presently there is little CMA training provided to Realtors, as a result the results can vary even more widely than appraisals. This is why it is so important to choose the right Realtor to help your price your home and not just the one that suggests the highest price.

To get an idea of recent activity in your local marketplace, the CMA should include information about currently available active comparable listings, pending sales, sales that occurred (sold) within the last 6-9 months, as well as information about listings that did not sell during the listing period.




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