A comparative market analy s i s (or CMA) is a popular and fairly easy method of appraisal used by agents, brokers, investors, and bank appraisers to arrive at a fair market value for real estate property.
The idea is straightforward.
A comparative market analysis allows the analyst to compare the sale prices of recently-sold properties in order to determine what fair market value a similar-type property might be if it were sold today. This is just a general description, of course, but we'll be covering the nuances below in detail, so hang with us.
Also, bear in mind that though the principals are the same for any CMA, whether for houses or rental properties, our particular interest surrounds real estate investing so this article will refer to examples and instances related to income-producing and commercial real estate property.
Okay, let's get started.
As stated, a comparative market analysis provides a method of appraisal that is not difficult and in most cases can be used by anyone. Nonetheless, for a CMA to be beneficially effective there are some general ground rules that should be understood and observed.
Foremost, the investment properties must be similar in type.
For instance, you would not benefit by trying to compare a commercial office building to a residential apartment complex, a strip center to a public storage facility, or for that matter, any combination thereof. The income properties must serve a similar purpose and tenancy.
Secondly, the properties should be similar in size, condition and configuration.
A duplex, for example, is not a good comparison to a large apartment building due in part to size. Likewise, an older, outdated property in poor condition should not be expected to have the same value as one perhaps that is newer or more updated or in relatively good condition. The same goes for configuration; a multi-family rental consisting of all one bedroom-one bath units, for instance, might not demand the same market value as one consisting of all two bedroom-one bath units.
Thirdly, the location of the rental properties should be in the same general type of neighborhood and market area.
There can be vast difference in the sale price of a commercial real estate property located in an upscale neighborhood close to shopping and freeway access, for instance, to one located in a more remote and declining neighborhood. The same, of course, is true for the general market area; real estate values can differ greatly even between cities just a few miles apart.
Fourthly, it's best to construct your comparative market analysis with income properties that sold recently. This is not always possible in every situation, but when you can, try to restrict the sale-date of your comps to within the last six months or so.
There you have it.
A comparative market analysis is a simple method of appraisal ฝากขายอาคารพาณิชย์ that can provide you with a way to effectively arrive at real estate fair market value. It all boils down to a process of property comparison, but always bear in mind that a CMA only works when you compare "apples-to-apples".
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