Appraiser's Guide to CMAs - GEORGIA 2023

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AN APPRAISER’S GUIDE TO CMAS

About the Firm D. Scott Murphy, Chairman of the Georgia Real Estate Appraiser’s Board, owns both DS Murphy & Associates as well as the Academy of Real Estate. Offices across the nation, from California to Florida Experienced staff with geographic core competencies Well-versed in all types of valuation assignments

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3 P O L L Q U E S T I O N : W H E R E D O YO U F A L L O N T H E C M A E X P E R I E N C E S P E C T R U M ?

A - I haven’t developed a CMA yet OR I let the software develop my CMAs B - I have been developing my own CMAs for listings C - I have a partnership with an appraiser and get a consultation appraisal for my listings D - I think valuation/pricing is completely subjective E - Other – None of these apply to me

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What is your house really worth?

This is how appraisers see it This is how lenders see it

This is your house

This is how buyers see it This is how tax assessors see it

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CMA – Competitive Market Analysis An analysis generated to estimate the value range of the subject property in order to arrive at a reasonable list price.

Appraisal – An unbiased estimate of market value based on three approaches to value. *Must be completed by a State Licensed Appraiser

Agents are not allowed to complete appraisals of property to render an opinion of market value. However, in order to accurately list a home an agent must have the necessary skills to develop a CMA in order to suggest a reasonable list price. The same holds true for an agent working for the buyer.

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KEY DEFINITIONS

Appraised Value:

The estimated fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

Market Value:

As defined by the Uniform Standards of Professional Appraisal Practice (USPAP), 2018 Edition: “a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal.”

CMAs & Appraisals Both follow the same basic 3- step process Brokers / Agents  Suggests to clients a range list price  Should seek advice for complex cases

1.

Research

2.

Field work

3.

Report

Appraisers  Extracts an appraised value  USPAP - competency ** Certified appraiser have years of experience and training, there is an Art & Science to appraising.

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COMPETENCY • Though "competency" goes beyond geographical expertise, it is important to take this element into consideration.

• Where is the subject located? Which geographic elements are most important?

• Who must have geographical expertise?

• Why is geographical expertise important?

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ZILLOW’S ZESTIMATE

 Probably one of the first searches your client did.  Banks don’t issue loans in accordance with estimated price values from websites.  Appraisals are proprietary, not public knowledge. Confidential information can only be shared with the client.

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SUBJECT PROPERTY –

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DESCRIBE YOUR SUBJECT NEIGHBORHOOD You must put yourself in the shoes of a typical buyer Determine the most important features of the subject property. Those which have the greatest impact on the value. *Unfortunately, the one which is often closest to the top of the list is Gross Living Area (GLA) County – either used county of use FMLS/MLS area numbers Schools Subdivision Style

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CRITERIA

Age – typical want to stay within 5 years of the subject. The same “era” of home. Lot size – particularly if the property is located on a large lot, acreage or has some special view amenity such as golf course, lake, etc. Basement VS Non-Basement Room count and bedroom/bathroom count *difficult to search by Pool? Accessory unit? Special circumstances

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DATA SOURCES

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COMPARABLE SEARCH:  Don’t limit yourself too much with too many search parameters. Learn to determine the most important, start with those and add more as necessary  Since we cannot search by square footage you may want to choose a larger number of potential comparables. The goal is to end up with 5-7 good sold comparables. That may take 10-15 sales.  We also want to look closely at similar active listings and pending sales. These will help you determine what the property IS NOT worth. We also want to end up with 5-7 good active and as many good pending sales as possible – these are truly your best “comps”.

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FMLS/MLS – ACCURACY COUNTS!

FMLS/MLS Picture

Reality

16 FMLS/MLS Picture

Great Water Pressure Reality

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LOT SIZE, SHAPE, AND INFLUENCES

Little Yellow Ruler – County Sites

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KEY DEFINITIONS

BEDROOM

A room of adequate size – generally 100+ sf Must have :

The 6 factors are …  Closet  Window (means of ingress and egress)  Door  100+ sq ft  Heat and cooled and finished to the same quality as the rest of the house  Convenient access to a FULL bathroom ***Must be above grade to be considered in the GLA of the appraisal

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Discussion Time…

Is it a bedroom?

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KEY DEFINITIONS

Gross Living area (GLA): GLA, as defined by HUD (The Department of Housing and Urban Development) is the total area of finished, above-grade residential space. It is calculated by measuring the outside perimeter of the structure and includes only finished, habitable, above-grade living space. NOTE: Fannie Mae considers a level to be below-grade if any portion of it is below-grade, regardless of the quality of its finish or the window area of any room. All measurements are based on American National Standards Institute (ANSI) measuring standards.

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GLA?

Basement or GLA ON URAR GLA?

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TRIVIA QUESTION!

According to legend, in Scotland, what do some homeowners do to their homes when the pay off their mortgage?

Paint their front door RED

D. S. MURPHY & ASSOCIATES

OFFICE 678-584-5900 EMAIL DSMAOFFICE@DSMURPH Y.COM

WEBSITE WWW.DSMURPHY.COM

5400 Laurel Springs Pkwy, Suite 108 | Suwanee, GA 30021 | 678-636-4811 | education@dsmurphy.com

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FIELD WORK • Drive through the neighborhood and familiarize yourself with important features; parks, schools, commercial • Inspect the subject property • Make notes of improvements • Measure the property????

• Drive by your comparables and make notes

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Looks can be deceiving... ick Cl to d ad te xt

Location, Location, Location

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Do your research!

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FACTORS THAT AFFECT VALUE

•

Consistency

•

Condition and appeal

•

Quality

•

Construction and layout

•

Location

•

Proximity to commercial

•

Supply & Demand

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FACTORS THAT AFFECT VALUE

Physical – wear and tear on the improvements, deferred maintenance External – exterior influences on the site - ie: traffic, commercial or industrial, airport Functional – over-improvement poor design or flow

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FACTORS THAT AFFECT VALUE

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SKETCH

• Measure exterior dimensions of house to calculate Gross Living Area

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SKETCH • Separate living areas

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SKETCH – (OPEN AREAS NOT INC. IN GLA)

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WHY MEASURE? Tax Assessors in different jurisdictions use different standards square footage information. Some include “all area under roof” which means that a screen porch may be included. If an addition was not permitted, the “new” square footage may not be included in the assessors reported square footage. Some assessors report only the footprint, and you have to apply a multiplier to get the true total. (i.e. a two-story house with equal lower and upper levels, each containing 1000 square feet, would be reported as 1000 square feet, based on the footprint, and a multiplier of “2” is applied to get the total.)

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SUBJECT PROPERTY – LET'S DIVE IN...

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SUBJECT PROPERTY -

• Colonial – 2 Story home • Exterior Finish Material – Siding • Slab – no basement or crawl space • Deck, Screened porch – backyard space • 2 Car Attached Garage • Tennis/Pool community – Annual fee/Management Company

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Subject Property : Interior Photos

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Search for Comparables Property Residential Detached

Status - Date or Range

Property Details

Residential Attached Total Bedrooms

Active

Location Active Under Contract

St #

Dir Pfx

Total Full Baths

St Name

St Sfx

Dir Sfx

Unit #

Square Footage

Coming Soon County

OR



NOT



Zip Code

OR



NOT

 Year Built

Pending

City

OR



NOT



Subdivision/Complex

OR



NOT



Hold

School Withdrawn

Expired

Closed

Elementary School:

Middle School:

High School:

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What About Active or Pending Listings?

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ELIMINATE OUTLIERS IN SEARCH RESULTS - Compare data and search for outliers in any category - Look at exterior photos - Examine the room counts and layouts - Narrow or widen the search according to results

Initial search results

Use link to access https://adobe.ly/3dL6cHw

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Initial search results

Use link to access https://adobe.ly/3dL6cHw

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Narrowing it down Search -- 100 Oak Ct. Anywhere, USA. ( < .5 mi, 90 days, elementary school) List

Distance

Type

Price

Status

Address

Subd/Complex

City

County

Bed

FB

HB

Yr B

21

0.4 mi

DET

$645,000

A

110 Newton Green

Windy Glenn

Anywhere

MyCounty

4

3

1

1994

22

0.4 mi

DET

$439,000

A

231 Wood Creek Drive

Wood Creek

Anywhere

MyCounty

4

2

1

1996

4

0.2 mi

DET

$399,900

A

315 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1998

10

0.3 mi

DET

$379,000

AUC

460 Derby Court

Juniper Down

Anywhere

MyCounty

4

3

1

1995

18

0.3 mi

DET

$379,900

P

124 Wood Creek Drive

Wood Creek

Somewhere

MyCounty

4

3

0

1997

5

0.2 mi

DET

$345,000

P

330 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1995

3

0.1 mi

DET

$325,000

P

600 Oak Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1991

8

0.2 mi

DET

$617,000

C

183 Wyngate Trail

Windamount

Anywhere

MyCounty

4

3

1

2009

16

0.3 mi

DET

$473,000

C

910 Links Terrace

Windy Glenn

Anywhere

MyCounty

4

2

1

1991

24

0.4 mi

DET

$393,000

C

514 Maple Run Drive

Maple Walk

Anywhere

MyCounty

4

2

1

1988

14

0.3 mi

DET

$387,000

C

520 Vineyard Walk

Vineyard

Anywhere

MyCounty

4

2

1

1994

6

0.2 mi

DET

$336,000

C

519 Cannon Drive

Knights Corner

Anywhere

MyCounty

4

2

1

1996

11

0.3 mi

DET

$335,000

C

500 Plum Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1988

2

0.1 mi

DET

$328,000

C

400 Holly Court

Douglas Hall

Anywhere

MyCounty

3

2

1

1992

48

Narrowing it down Search -- 100 Oak Ct. Anywhere, USA. ( < .5 mi, 90 days, elementary school) List

Distance

Type

Price

Status

Address

Subd/Complex

City

County

Bed

FB

HB

Yr B

21

0.4 mi

DET

$645,000

A

110 Newton Green

Windy Glenn

Anywhere

MyCounty

4

3

1

1994

22

0.4 mi

DET

$439,000

A

231 Wood Creek Drive

Wood Creek

Anywhere

MyCounty

4

2

1

1996

4

0.2 mi

DET

$399,900

A

315 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1998

10

0.3 mi

DET

$379,000

AUC

460 Derby Court

Juniper Down

Anywhere

MyCounty

4

3

1

1995

18

0.3 mi

DET

$379,900

P

124 Wood Creek Drive

Wood Creek

Somewhere

MyCounty

4

3

0

1997

5

0.2 mi

DET

$345,000

P

330 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1995

3

0.1 mi

DET

$325,000

P

600 Oak Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1991

8

0.2 mi

DET

$617,000

C

183 Wyngate Trail

Windamount

Anywhere

MyCounty

4

3

1

2009

16

0.3 mi

DET

$473,000

C

910 Links Terrace

Windy Glenn

Anywhere

MyCounty

4

2

1

1991

24

0.4 mi

DET

$393,000

C

514 Maple Run Drive

Maple Walk

Anywhere

MyCounty

4

2

1

1988

14

0.3 mi

DET

$387,000

C

520 Vineyard Walk

Vineyard

Anywhere

MyCounty

4

2

1

1994

6

0.2 mi

DET

$336,000

C

519 Cannon Drive

Knights Corner

Anywhere

MyCounty

4

2

1

1996

11

0.3 mi

DET

$335,000

C

500 Plum Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1988

2

0.1 mi

DET

$328,000

C

400 Holly Court

Douglas Hall

Anywhere

MyCounty

3

2

1

1992

49

Re-opening your search Search -- 100 Oak Court, Anywhere, USA. ( < .5 mi, 180 days, elementary school, bed 4-) List

Distance

Type

Price

Status

Address

Subd/Complex

City

County

Bed

FB

HB

Yr B

1

0.2 mi

DET

$399,900

A

315 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1998

2

0.3 mi

DET

$379,000

AUC

460 Derby Court

Juniper Down

Anywhere

MyCounty

4

3

1

1995

3

0.2 mi

DET

$345,000

P

330 Belwood Court

Juniper Down

Anywhere

MyCounty

4

2

1

1995

4

0.1 mi

DET

$325,000

P

600 Oak Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1991

5

0.2 mi

DET

$336,000

C

519 Cannon Drive

Knights Corner

Anywhere

MyCounty

4

2

1

1996

6

0.3 mi

DET

$335,000

C

500 Plum Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1988

7

0.1 mi

DET

$328,000

C

400 Holly Court

Douglas Hall

Anywhere

MyCounty

3

2

1

1992

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SUBJECT PROPERTY – R E M INDE R

QU IC K E XT E R IO R

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A

B

C

LOOK AT EXTERIOR PHOTOS: PENDING SALES Which property or properties would you eliminate?

Which property or properties would you keep?

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A BA

B

C

Look at Exterior Photos: Closed Sales Which property or properties would you eliminate?

Which property or properties would you keep?

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SYNTHETIC VS. HARD COAT STUCCO – HOW TO TELL THE DIFFERENCE

1. Knock on the siding. If it is synthetic it sounds hollow, if hard coat (real) it hurts the knuckles and sounds like concrete.

2. Press on the siding. If synthetic it "gives" and hard coat does not.

3. Be aware that many hard coat stucco houses have trim that is synthetic. This is usually OK because the stucco below the trim is hard coat.

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ANALYSIS OF COMPARABLES:  Print the sales and listings you have narrowed it down to and review the information closely. Use common sense if something does not appear to match photos and contact the agent for clarification if necessary.  Review the photos closely and compare the home to your subject property. Look for the comparables which most closely resemble your property.  Interior features – kitchen & baths  Exterior features – brick/frame/stucco/amenities  Make notes on your printouts  Eliminate any which vary significantly from your subject  But do not eliminate too many until you have cross referenced other sources

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Even more narrow...

Search -- 100 Oak Ct. Anywhere, USA. ( < .5 mi, 180 days, elementary school, bed 4-) List

Distance

Type

Price

Status

Address

Subd/Complex

City

County

Bed

FB

HB

Yr B

1

0.1 mi

DET

$325,000

P

600 Oak Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1991

2

0.3 mi

DET

$335,000

C

500 Plum Drive

Douglas Hall

Anywhere

MyCounty

4

2

1

1988

3

0.1 mi

DET

$328,000

C

400 Holly Court

Douglas Hall

Anywhere

MyCounty

3

2

1

1992

4

0.2 mi

DET

$315,000

C

200 Jasper Street

Douglas Hall

Anywhere

MyCounty

3

2

1

1989

5

0.1 mi

DET

$290,000

C

300 Cherry Lane

Douglas Hall

Anywhere

MyCounty

3

2

1

1990

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Comparative Market Analysis Feature

S Subject 100 Oak Ct, Anywhere, USA

Address Status

Days since sold (if applicable) Year Built Subdivision Proximity to subject List Pice Days on Market Sold Price Value Adjustments Description

C1 Comparable

C2 Comparable

C3 Comparable

C4 Comparable

C5 Comparable

200 Jasper St, Anywhere, USA

300 Cherry Ln, Anywhere, USA

400 Holly Ct, Anywhere, USA

500 Plum Dr, Anywhere, USA

600 Oak Dr, Anywhere, USA

Description

Description

Description

Description

Description

Adj + (-)

Adj + (-)

Adj + (-)

Adj + (-)

Sale or Financing Concessions Date of Sale/Time Location Style Site Age Condition Bedrooms Bathrooms Gross Living Area Basement & Finished Rooms Below Grade Garage/Car Storage Porch/Patio/Deck Exterior Finish Material

Net Adjustments Total Net Adjustments % Gross Adjustment % Adjusted Sales Price of Comparable Analysis, Data Sources, Methodology Brokers Price Opinion (BPO) based on Comparative Market Analysis (CMA) Summary

Min:

Max:

Adj + (-)

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Sample "Quick CMA"

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CMA Practice Sheet **Link will be in the CHAT  Take 10 minutes to fill in all of the information that you can  There are no wrong answers, simply a way to gauge where you have questions  There is no TEST – this is to start conversation

Web Data Source:

https://bit.ly/3m7n66f Password is: CMAs2020 Printable CMA Worksheet:

https://adobe.ly/31K62M7

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Comp 1 Interior Photos

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Comp 2 Interior Photos

Comp 3 Interior Photos

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Comp 4 Interior & Outdoor Space Photos

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Comp 5 Interior Photos

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COMPARABLE MAP

c2

c1

What do you notice upon first glance?

What questions does this bring up?

Consider placement within neighborhood AS WELL AS placement within the larger picture

s c5

c3

c4

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ADJUSTMENTS:

• Adjustments are based on the incremental difference a buyer is willing to pay for the given feature • While somewhat rooted in cost; cost does not always equal value • CSS – comp SUPERIOR SUBTRACT • CIA – comp INFERIOR ADD

CSS & CIA - EXAMPLE

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ALWAYS ADJUST TO THE SUBJECT

The best adjustment for a feature is...

That means you have comparables with similar features.

Adjustments are derived and extracted from the market based on the actions of buyers and seller

68 A WORD ABOUT BRACKETING – GLA

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A FINAL WORD ABOUT BRACKETING

If all adjustments are in the same direction, there is no “BASIS” for the adjustment, and the value may be overstated (+ adjustments) or understated (- adjustments)

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Co mp Gr leted id

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WRITING THE REBUTTAL



Only 1 submission, cannot send more docs later



Most lenders have a required form you must use



Most likely additional comps will be required.



Make sure data is accurate (must use reliable source)

Consultation Appraisal™ •

Be sure your listing is priced correctly – make sure your seller is not leaving money on the table.

•

Know the true size of the subject property

•

We will offer suggestions on updates or improvements to unlock additional profits for your seller

•

Negotiate with power and conviction

•

Be aware of any potential bank appraisal issues

•

Be aware of any repairs a bank appraisal would call for

•

Excellent way to convince buyers of the home value

•

We are your consultant throughout the transaction

•

If a subsequent bank appraisal comes in below our value, WE will write the rebuttal letter and have it to you within 24 hours! We win most of the time.

•

This keeps the transaction on track and virtually guarantees you will not have an appraisal issue

•

Standard fees start at just $450

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One of the Nation’s Largest Appraisal Firm Here to serve you • • • • •

residential appraisals complex appraisals commercial appraisals home inspection real estate consulting

D . S C O TT M U R P H Y , S RA CHAIRMAN OF THE G A R E A L E S TAT E A P P R A I S E R S BOARD

www.dsmurphy.com | 678-584-5900