Real Estate Practice Chapter 4

Competitive Market Analysis (CMA)

An analysis of the market value of a property prepared by a real estate licensee, usually in order to help the seller decide on a listing price, based on the selling or listing prices of comparable properties; similar to, but less formal than, a sales comparison appraisal.

Cost

The amount paid for anything in money, goods, or services.

Market Value

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Also called fair market value, value in exchange, or objective value.

Market Price

The current price generally being charged for something in the marketplace, or actually paid for a property. Compare: Value, Market.

Value in Use

The value of a property to its owner or to a user. Also called use value or utility value.

Building Analysis

The gathering of data about the improvements, such as the square footage, number of bedrooms and bathrooms, and evaluation of the general layout and design.

Neighborhood Analysis

The gathering of data on home sizes and styles, topography, features, and amenities in a neighborhood, as part of the appraisal or property management process.

Site Analysis

The gathering of data about the physical characteristics of a property and other factors affecting its use or title, as part of the appraisal process.

Arm’s Length Transaction

A transaction in which there is no pre-existing family or business relationship between the parties.

Cash Equivalent

Financing that is on terms that are standard for the local market under current conditions, which would not affect the sales price of the property.

Comparable

In appraisal, a property that is similar to the subject property and that has recently been sold. Also called a comp or a comparable sale.

Adjustments

Modifications made to the selling price of a comparable property to reflect differences between the comparable and the subject property.

Low Appraisal

An estimate of value that is below the price the buyer and seller have contractually agreed on.

Request for Reconsideration of Value

The process in which you file an appraisal value dispute, which comes into play when an appraiser's opinion of value comes in lower than the sales price agreed upon by the parties involved in the transaction.