My next door neighbor contacted me to see if I could do a quick CMA for her son. He is getting a divorce and his lawyer requested that he contact a realtor to get a CMA on the house. He purchased the home in 2009 for $222,000.
As I was searching for comps, I noticed there were NO similar comps that recently sold in the last 6 months in this neighborhood. This community has a very low turnover rate. So, when faced with this dilemma, I looked at two neighborhoods located within a 3 mile radius from the subject property's neighborhood to pull comps in the last 3 months, which I was able to find.
When I delivered my CMA to my neighbor, her first question was, "How much do you think the home will sell for?" I told her based on the sold comps, I would say anywhere between $240K to $250K. [I explained to her that the market gives us a price range from minimum, average, to maximum SP/SF -- this figure can be adjusted based on factors that impact resale value such as property condition, upgrades etc.]
My neighbor was SHOCKED! She consulted a lady (who isn't a realtor) who told her that the home would sell for $188,000. I was DOUBLE SHOCKED!!!!
I said that can't be. Your son's home has 5 bedrooms, 3.5 bathrooms and is a whopping 3,192 square feet.
Homes in that neighborhood that have 3/4 bedrooms, 2 bathrooms and are between 2,000 to 2,200 square feet sold anywhere from $175K to $188K in the last 3 months and they were NOT distressed properties. The average SP/SF was $85. (Of course, I couldn't use these comps to do a CMA because they are not reflective of her son's home. That would be comparing apples to oranges.)
So, my neighbor explained to me how her non-realtor friend came up with those numbers. As she pulled up the email, lo and behold, she determined the "estimated market value" based on the "accessed value" on the property tax rolls!!!!
I explained to my neighbor the difference between "accessed value" versus "appraised value."
Accessed value is value placed on the property for tax purposes only. This has nothing to do with the market value of your home. Since homes are accessed for property taxes each year in Texas, accessed value is usually based on outdated information. This value doesn't take into account any new improvements that you've made to your home which can impact resale value nor does it reflect current market conditions which constantly change.
Appraised value is an unbiased estimation of what a home would likely sell for in today's market based on a neighborhood's recently sold comps in the the last 6 months. (Of course, if you can find comps in the last 3 months, that is even better.) This is the method certified appraisers use to determine market value. Remember, an appraisal is only as good as the day it was performed.
Case and Point: Contact a Realtor who can determine what your home would likely sell for in today's market!
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