MARKET ANALYSIS

Comparative Market Analysis

A Comparative Market Analysis (CMA) is a tool used by real estate agents to value a property. It evaluates similar propertied that have recently sold in the same area. Agents find comparable sales and use them to conduct a sales comparison. In most cases, an agent will find several properties that have recently sold and are as similar to and located as close to the property being valued as possible. Each one is then analyzed to pinpoint differences between it and the property being valued. Once these differences are priced out, the price of each comp is adjusted to see what it would cost if it was identical to the property being valued were it to be sold in the current market.

APPRAISALS

Based on a Professional’s Opinion

An appraisal is an unbiased valuation of a property based on a professional’s opinion. They are usually what mortgage companies use for purchases and refinances. A lender usually orders a property appraisal and the cost of the appraisal is paid by the property owner. An appraiser does a complete visual inspection of the interior and exterior of the property as well as taking into consideration recent sales of similar properties and market trends. The appraiser then compiles a detailed report on the property, including an exterior building sketch, a street map showing the property and any comparable sales, photos of the property and street, an explanation of how the square footage was calculated, and any other relevant information.

REFINANCING

Lenders base the amount of their loans on the value of your property and usually allow you to borrow a maximum of 75% to against your property. Knowing what your property is worth allows lenders to calculate your equity in the property. The more equity you have, the better terms you will receive on your refinance.

PROPERTY IMPROVEMENTS

Commercial tenant improvements, also known as commercial leasehold improvements or buildouts, are changes or repairs a landlord makes to their property as part of the lease agreement. These changes are needed to fit specific business needs can increase a property's value. The landlord will either pay for the changes directly, reimburse the tenant for the changes, or offer reduced rent. All scenarios in which are considered with a property's valuation.

REFINANCING YOUR PROPERTY

Refinancing commercial real estate can help investors achieve a better interest rate, a longer term, or a longer amortization, increasing their cash flow. In addition, borrowers may want to get cash-out refinances in order to free up capital to make renovations and improvements, or to invest in other properties.

PLANNING

Though it’s not a necessity, simply knowing the value of your asset is good information to have. It will help you plan for the future and deal with unforeseen circumstances when you might be in a position that requires extra money or a quick relocation. Knowing how much equity you have in your property and how much you may be able to borrow against it or sell it for will help you respond to any financial curveballs that life throws at you.