Arriving at an ideal sale price is hardly an outcome of guesswork by a real estate agent. Skilled agents recommend purchase or sales prices only after a carefully considered review of the property’s condition, location, structure, amenities, and functionality, all in conjunction with the real estate that has sold and is currently on the market. 

The best agents follow a structured process as they evaluate properties and render pricing opinions, systematically balancing the features and benefits of the home against the attributes of competing homes, recently sold homes, and homes that have been sold in the recent past.

The real estate world relies on three basic approaches to property valuation:

-Appraisal. The vast majority of prospective property purchasers seek financing from a bank or financial institution. These financial entities require an appraisal in order to certify the value of the purchased property and to ensure that the funds being lent cover a certain percentage of the real value of the property as assessed by an impartial third party and not a percentage of some pulled out of the air figure set by an aggressive Seller or agent. An appraisal analyzes and documents the condition and attributes of a property and analyzes its value through a process that usually involves comparing the property with sales of comparable properties in the Bonita Springs area.

-Broker price opinion (BPO). A BPO is a property value assessment, which is required by banks selling  foreclosure properties (known as REO properties). Each bank has its own BPO form and process to complete, but nearly all aim to achieve the same objective: To understand the value of the foreclosed property, the likely sales time frame, and the probability of a sale at a certain price.

-Competitive market analysis (CMA). While appraisals come into play in most real estate deals, and BPOs come into play some real estate deals, competitive market analyses are fundamental to all professionally realtor listed real estate deals.

CMA is shorthand for competitive market analysis, a market review that studies the prices of sold properties, pending sales, and active and expired listings to arrive at the current fair market value for a given property.

The key word in the CMA definition, and in fact in any valuation, is “current.” Whether a property is analyzed or interpreted using a CMA, a broker price opinion, or a third-party appraisal, its assessing the today’s value of the property.

Every time a CMA is used to advise a Seller or Buyer on price,  that evaluation is based on today’s market conditions and today’s market timing, and that many factors could influence the value assessment either positively or negatively in the future.