Why You Might Want a Market Analysis of Your Home Even When You’re Not Selling

Why You Might Want a Market Analysis of Your Home Even When You’re Not Selling

Most homeowners know that getting a comparative market analysis (CMA) of their home is essential when it comes time to sell their home. Sellers need to know how much their home is worth in the current housing market to price it right when listing it.

But did you realize this comparative market analysis also can be a useful and needed resource at other times when you’re not selling your home?

In fact, there are benefits of knowing your home’s value when you:

• plan to dispute a property tax assessment,
• want to refinance your home,
• undertake financial planning,
• seek out homeowner’s insurance,
• face divorce proceedings and need to divide assets,
• take out a home equity line of credit,
• and more!

If you find yourself in a situation where it would be helpful to know the value of your home, don’t rely on the online estimates because they may not be the most accurate.

Knowledge Is Power

Knowing how much your home is worth in the current market gives you more control and the ability to proceed with assurance — whether you’re disputing a property tax assessment or devising a financial plan that accurately reflects your assets.

This is important information to have as a homeowner in certain situations, especially if you think your home’s value has increased or changed since you last had a market analysis done or bought your home.

Your home is most likely your largest financial asset so why wouldn’t you want to know what it is truly worth and not just do your own guesstimate or rely on an online estimate?

Having a comparative market analysis doesn’t require you to hire and pay for a licensed appraiser — rather it’s a free and valuable service that may realtors provide to their clients (even if you don’t plan to sell anytime soon!).

What Is a CMA?

When conducting a comparative market analysis, your realtor typically finds at least three comparable homes (or comps) located near your home with similar features that have sold ideally within the last 3 months.

The final sales price on these three homes and any differences from your home with the following components — location, lot size, square footage, age and condition, number of bedrooms and bathrooms, and any special features such as garage, finished basement, patio, pool, etc — will be considered when the estimated value is computed.

You’ll get a printed report going over how your home compares to other homes in your neighborhood, and providing an assessed value using all the components mentioned above.

Using Your CMA Report

Below is a rundown on how a comparative market analysis is helpful in certain circumstances. The knowledge and information you have from your CMA report can give you the confidence and assurance you need before you undertake any of these situations:

Property Tax Assessment — Here’s where local tax authorities have assessed the value of your home but could be using outdated data that doesn’t reflect today’s true market value. If you think your tax liability is too high and want to lower your bill, a CMA can help you determine if your assessment is fair. Then you can determine whether you should proceed with appealing it. Remember that you have a limited amount of time to appeal, so make sure you know your jurisdiction’s deadline.

Refinancing Home — Understanding the current market value of your home is important when refinancing. A CMA will provide this information and also give you an idea of the equity you have in your home. The bank or lender will also require an appraisal to be completed on the home as well. Ask us if you want to find out if you will be required to get an appraisal done for your refinance.

Financial Planning — A CMA can help you fully understand your assets — and your home is most likely your largest one. Once you know your home’s current assessed value, you can determine your net worth by subtracting any outstanding balance on your mortgage. The value of the difference is a part of your net worth. Knowing this sets you on the right path as you plan your financial goals and better understand your overall financial health.

Homeowner’s Insurance Premium — Typically, the more a home costs to replace, the more you will pay in coverage to insure it. Here’s where a CMA comes in to help you determine your home’s value, which could help you lower you insurance premium or ensure you’re getting the correct coverage for your property.

Divorce Proceedings — Getting a divorce is stressful already, and most likely, you’ll be dividing assets — in which you’ll want to ensure you are getting the most out of each one. As one of your most valuable assets, your home’s value can involve hundreds or thousands of dollars. A CMA should be part of your settlement strategy to determine what the property’s equity is worth. This information is essential whether you’re selling the home and dividing the profits, or one spouse is remaining in home and buying out the other.

Home Equity Line of Credit (HELOC)— Just like when your refinance your home, you’ll be working with a bank or lender. They’ll need to know the value of your home in the current and local housing market to see if lending you money is worth the risk. And, you want an understanding of the true equity of your home before you seek out a HELOC. Getting a CMA can help with this process. Like a refinance, the bank or lender may want to get an appraisal of the home completed as well.

Get Your Free CMA

If you find yourself in any of these or other situations where it would be helpful for you to know today’s value of your home, reach out to me us at kurrleteam@firsthome.com. We can put you in touch with a realtor in your market to put together a CMA for free.