I. Checklist for CMA/Appraisal
□ know how to perform a CMA with your MLS
□ identify 3-6+ Comparable properties
□ know the subject criteria, including distinguishing features and limiting features
□ CMA is forward looking and Appraisal is current/historical
□ Appraised value will need to match or exceed the sales price in most cases
□ Have a basic understanding of adjustments-see list below
II. Action items for CMA/Appraisal
a. Practice running CMAs on properties you know
b. Compare homes that are similar in age, style, location, size using recent sales
c. Use adjustments to level the playing field
d. Look back 3, 6, 9, 12, 15, 18 months as needed
e. Stay in the immediate area if you can.
III. Best Practices for CMA/Appraisal
a. Understand the VA/FHA/CONV guidelines
b. Be a resource for the appraiser if needed
c. Have documents available for important upgrades
d. Stay up on trends in the market—may influence report
e. Appraiser will work through the listing agent, BE READY.
f. Understand bracketing when doing a CMA
g. Don’t compare apples and oranges (you cannot adjust one to the other)
h. Consider market during CMA
i. Consult and consider AVMs during CMA
j. Consult and consider the taxes assessed value during CMA
k. Consult and consider past sales, MLS history of the subject during CMA
IV. You oughta & gotta for CMA/Appraisal
a. Be willing to use your CMA to defend sales price
b. Make the Appraisers job easy, provide access, offer comps, prior appraisals, sketches
c. Understand Conventional, FHA, VA appraisal guidelines
d. Spot obvious appraisal show stoppers
e. Counsel the seller on the importance of the appraisal function
f. Counsel the buyer on the importance of the appraisal function
g. Know who pays for, who orders, and the approximate cost of appraisal
h. Run new CMAs as the market changes.
i. Run different CMAs using different tactics and compare.
V. Pitfallsfor CMA/Appraisal
a.Over pricing a listing, taking a contract higher than expected appraisal value
b. Loan type will influence the appraisal guidelines
c. FHA/VA appraisals can stay with a property for a period of time
d. Appraisals can be challenged, but by the BUYER
e. Increasing markets are hard for appraisals to keep up with Values
VI. Notesfor CMA/Appraisal
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VII. Capital Tips from the Pros for CMA/Appraisal
Three appraisal types
Sales comparison Most common
Cost-included as back up by good thorough appraisers
Income Capitalization Great for rentals, apartments, Quads, Triplex, Commercial
Possible adjustment amounts
Bedroom $4000
Bath full $2500
Bath half $1500
Square footage 25% of the price per foot, ie. $140/ft. adjust $40 per foot
Basement $8000
Screened porch $6500
Fireplace $2500
Fence $2500
Att 2 car garage $10000
Att 1 car garage $5000
Det 2 car garage $7000
Det 1 car garage $3500
Minor updates/upgrades $10000
Major updates/upgrades $20000
