MARKET ANALYSIS

Comparative Market Analysis

A Comparative Market Analysis (CMA) is a tool used by real estate agents to value a Land / Ranch. It evaluates similar properties 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 three properties that have recently sold and are as similar to and located as close to the Land / Ranch being valued as possible. Each one is then analyzed to pinpoint differences between it and the Land / Ranch 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 Land / Ranch 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 Land / Ranch based on a professional’s opinion. They are usually what mortgage companies use for Land / Ranch purchases and refinances. A lender usually orders a home appraisal and the cost of the appraisal, sometimes up to $500, is paid by the homeowner. An appraiser does a complete visual inspection of the interior and exterior of the home as well as taking into consideration recent sales of similar properties and market trends. The appraiser then compiles a detailed report on the home, including an exterior building sketch, a street map showing the Land / Ranch and any comparable sales, photos of the home 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 90% against your property. Knowing what your Land / Ranch 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.

Land / Ranch IMPROVEMENTS

If you’re doing Land / Ranch improvement projects to increase the resale value, you want to make sure you’re not pricing it out of the market. If your property is already priced on the high-end for your area, making too many improvements could make it more difficult to sell. When you get a valuation, you can see how your Land / Ranch compares with others in the area and let this guide your Land / Ranch improvement decisions.

QUALIFYING FOR CREDIT

If you want to borrow cash against your Land / Ranch, Clay can connect you with his preferred Ag Lender. To qualify, you must have a certain level of equity in your property. Most lenders require at least 20%. Getting a Land / Ranch valuation will help you determine if you qualify and will be used by the lender to make a decision on your loan.

PLANNING

Though it’s not a necessity, simply knowing the value of your Land / Ranch 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 ability to borrow quickly. Knowing how much equity you have in your Land / Ranch 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 or take advantage of investment opportunities when presented.