Understanding Real Estate Reports: Appraisals, CMAs, and More
Understanding Real Estate Reports
- Introduction:
- In buying or selling a property, thorough due diligence is essential. The Real Estate Market Report is critical among the numerous reports you’ll encounter.
- Appraisal:
- Definition: An appraisal is a formal and comprehensive assessment of a property’s current market value conducted by a licensed appraiser, valid on the day of the appraisal. The next day, the whole data may shift.
- Purpose: Appraisals provide an objective evaluation of a property’s worth at a specific point in time, factoring in aspects like location, condition, comparable sales, and prevailing market conditions. Lenders often require it for mortgage approval, and it serves various legal and financial purposes.
- Key Points: Appraisals offer an unbiased estimate of a property’s value and are typically valid for a specific duration. It is crucial to note that their validity diminishes over time as market conditions evolve.
- CMA (Comparative Market Analysis):
- Definition: A Comparative Market Analysis (CMA) is a report prepared by a real estate agent to help clients understand the current market conditions and estimate a property’s potential selling or buying price. Depending on the need, CMAs can provide current and historical data, like for probate and divorce properties.
- Purpose: CMAs are valuable tools for setting competitive listing prices for sellers and determining fair offer prices for buyers. They play a vital role in negotiations within the real estate market.
- Key Points: CMAs are based on recent comparable property sales, active listings, and market trends. While less formal than appraisals, they are essential in aiding clients in making informed real estate decisions.
- Monthly Data Reports (Various Kinds):
- Definition: Monthly data reports in real estate offer a snapshot of the local market’s current state. Real estate professionals, organizations, or online platforms typically compile and distribute these reports.
- Purpose: Monthly data reports offer a comprehensive overview of the local real estate market, helping individuals understand trends, assess property values, and make informed real estate decisions.
- Key Points: These reports focus on different market aspects, such as inventory levels, median home prices, days on the market, and more. They complement CMAs by offering a broader market perspective.
- Components: These reports typically encompass a wide range of data, including median home prices, inventory levels, days on the market, price trends, comparative analysis, and local market commentary.
Real-Time Market Insights with Altos.com
Altos Research is a leading real-time real estate data provider, offering weekly market statistics, analysis, and reporting for nearly all U.S. zip codes. This service aids real estate professionals, investors, and financial institutions make informed decisions by providing them with current market conditions. Their proprietary technology sets them apart by delivering real-time, neighborhood-specific market insights, which allows clients to gain a competitive edge with actionable intelligence each week.
Differentiator: Altos focuses on “how the market is today,” and most other data providers focus on “How the market was last month.” Therefore, the inventory count excludes pending and contingent.
Different components of the reports.
Interactive report: Visual cues like sparklines, images, and charts help tell a story for those more interested in visuals. Move the cursor around and see what is embedded there.
Latest version: You’ll get the most recent version of that report.
Condos and townhouses: You can select the data option, which will pop up in condo updates; the single-family homes tab focuses purely on single-family homes.
Real-time market profile: you’ll see our real-time market profile on the right-hand side. The most important statistics are visible in a single shot.
Look back feature: We also include a timestamp, 13 weeks to look back, known as three months.
Total inventory count: YOu can watch the key indicators to see where we’re going.
So, the median list price here is directly related to the total inventory count that we see here. The median price of new listings is just the data set of new listings that came onto the market since our previous capture the previous Friday. So that’s the difference between those two.
Price per square foot is straightforward, i.e., Average days on the market versus Median days on the market. This is an excellent opportunity for a buyer or seller when negotiating the offer.
This number is the average number of days on the market. This is going to include stale pieces of inventory. We’ve all seen them. Those houses stay on the market week after week, whereas everything else sells quickly. That will escalate this number quickly and may not truly represent what’s currently happening in the market. So, we’ve incorporated median days on the market. That removes the outliers. It focuses on a more accurate number and does a much better job of answering the question, how’s the market?
When there’s a big gap between the two, that’s indicating that there are some stale pieces of inventory. But when you think about it, this is what’s most looked at. So this is an impressive insight to have. The two key indicators to watch on these reports are price decrease and the other being relisted.
Sellers or Buyers Market: In the Market Dial indicator is a great visual. Greater than 30 favors the seller, and anything less than 30 favors the buyer. The higher the number, the hotter the market. And the great thing about this imaging is that it answers the question of how the market is today and how it compares to last month. Well, this first layer, the colored section, represents now, and the gray is running 30 days back.
When looking at this chart, be aware that this is five years’ worth of data. Right? We update this every week.
It’s going to be noisy, hence the dotted line. That is our seven day. To create what we call a trend, something smoother to look at is where we take these 13 weeks and average it out every week.
Well, that’s our 90-day, the more solid line. Only some know you can select the seventh day and focus on the trend.
But use the seven day as critical indicators of change. You will see that momentum seven days before the trend kicks in.
Click on the seven days to see that prices are dropping. Okay. So, that is one way to use this, but remember, this chart tells a story.
Market Action Index:
- Tells a story.
- Turns off the noise.
- Focuses on the roller coaster ride we’ve experienced over the last three years.
Now, in addition to changing these statistics, you can also dive in by looking at the total inventory.
Four Market segments: we look at all the inventory, listing it from most expensive to least expensive and then dividing it by four so that each segment has the same amount of inventory.
The blue line will always represent the most expensive 25% of properties.
The red line will always represent the least expensive 25% of properties.
This allows you to fine-tune conversations for the audience, whether they are buyers or sellers. If one is interested in the luxury market, let’s turn off the noise for everything else and focus on the nature of the market for that top, most expensive 25% of properties.
Median days on the market: for that particular segment. It gives you insight that you wouldn’t usually have and allows you to dive deeper and have a more complicated. And so that is what makes the market segments are the components that make up the report. There is a big difference, and you’ll be able to see how the market behaves differently within each segment. You can set expectations on how much (real estate) you can expect for your money.
Active inventory for every zip code within the USA.: One additional thing to the report that makes this shine is the ability to pop into other reports. However, every zip code can behave differently in the market; less than ten activities will show no data.
I am offering more comprehensive nationwide coverage than any other reports to keep my commitment to keeping the sellers and buyers informed.
Ask for more, and you shall receive it. There are many ways to skin the cat. Here is my Contact info: deepak@housesinsocal.com or Cell: 949 748-9834
Navigating through data can seem daunting, yet the insightful analysis and strategic use unlock its potential.
I am here to assist you in translating that into real estate success.
