Property ValuationIntermediateCalifornia Exam

A Comparative Market Analysis (CMA) prepared by a real estate agent is:

AA licensed appraisal that can be used for mortgage lending, under standard appraisal methodology

BAn informal estimate of value to help a client price a property, not a formal appraisalCorrect

CRequired by California law before any listing can be taken, as typically applied in a comparative market analysis

DOnly valid for 30 days after preparation, consistent with USPAP appraisal standards

Why An informal estimate of value to help a client price a property, not a formal appraisal Is Correct

Answer B: An informal estimate of value to help a client price a property, not a formal appraisal

A CMA is an informal tool used by real estate agents to help clients understand the market and set a listing price. It is NOT a certified appraisal and cannot be used to satisfy lender requirements for loan approval.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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Key Terms to Know

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

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