MARKET ANALYSIS

Comparative Market Analysis

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

APPRAISALS

Based on a Professional’s Opinion

An appraisal is an unbiased valuation of a home based on a professional’s opinion, commonly used in Chicago real estate transactions. Mortgage companies typically require appraisals for home purchases and refinances. A lender usually orders a home appraisal, and the cost, sometimes up to $500, is paid by the homeowner. An appraiser conducts a complete visual inspection of the interior and exterior of the home and considers recent sales of similar Chicago properties and market trends. The appraiser then compiles a detailed report on the home, including an exterior building sketch, a street map showing the home 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 Chicago property and usually allow you to borrow a maximum of 75% to 96.5% against your property. Knowing what your home is worth allows lenders to calculate your equity in the home. The more equity you have, the better terms you will receive on your refinance.

HOME IMPROVEMENTS

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

QUALIFYING FOR CREDIT

If you want to borrow cash against your Chicago home, getting a Home Equity Line of Credit (HELOC) could be a good option. To qualify, you must have a certain level of equity in your home. Most lenders require at least 20%. Getting a home 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 Chicago home 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 home 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.