"The assumption is that training for property valuation is for listing agents for CMAs and not for buyers agents. IMO, one of the most valuable skills any real estate practitioner can have is that of accurate property valuation."
I have to say I agree with that statement. As most of you know I have been primarily a listing agent for many years. Over the last 18 months or so I have had to revamp my business and now find myself working with more and more Buyers.
I find that one of the advantages I have is that I know how to value property. My market is saturated with foreclosures and Short Sales. Because of this, the listing price means nothing. The listing price is normally quite a bit lower than what the property will eventually sale for.
The purpose of a low listing price is to create a bidding war. I completely understand this strategy and have no problem at all working within the rules of this "game".
My Buyers are counseled to make offers based on the value of the property not the list price. This is very important for Buyers and their agents to understand when working in this kind of a market.
How many of you have had Buyers that insist on offering below listing price on every property they look at? How many of you counsel then to do this? Is the extent of your counsel telling Buyers to offer 90% of list price? Be honest. When was the last time you prepared a full blown CMA (Comparable Market Analysis) for a Buyer?
Do you even know how to prepare a market analysis? From some of the offers I see coming in on my listings my opinion is that..no..you don't. Your Buyers are missing out on properties because they are hung up on the listing price. Your job is to make sure this is not a stumbling block for them. The best way to do that is to make sure you are giving your Buyers a CMA.
This Buyer CMAcan be for a specific property or it can be based on the style and type of property they are looking for. Does that make sense?
Here's a CMA I prepared last week for a Buyer. We ended up getting his offer accepted even though there were about a dozen offers on the property. Check it out. Any questions?
Very funny Missy!! Broker brief report is the first one. The second is just CMA side by side. I then placed the report in PDFill.com and added my notes before embedding in Scribd. I use Scribd because it gets awesome Google juice.
We use them and it really helps, especially in this market where buyers get bad information from friends, family and the media...Helps to have something more authoritative that a guess from an agent as to what an offer should be...
So many of the buyers out there right now are bottom feeding. My market is relatively strong but they watch the national news and think that it applies to our market. Of course I counsel them but some just won't listen.
I would be in a world of hurt if I tried to turn in a closed file for broker review and he did not find a CMA. I can not believe someone Would NOT do it
BB, Thank you for a post that makes perfect sense. A lot of buyers agents and their clients would benefit from reading this as well! I just joined your Short Sale Superstar site and am interested in getting the SS designation.
Great Post. I always supply my buyers with CMA's before making an offer, however, I use the quick CMA. I must admit, yours is much more attractive and I may have to switch! :) thank you for the information!
BB - I have been doing Buyer CMA's for a very long time. Our MLS makes it too easy and very effective. I don't how I would be able to help a buyer without one. This post is a must for those who are not using this approach. BTW I like how you incorporated the CMA into your post. That is COOL!
We definately should provide a CMA to both our sellers and buyers. Our job is to educate the consumer about the current real estate market so that they can make informed decisions.
Thank you for the post. I probably would have save my self quite a bit of time with my current client, trying to lowball everything, if I had only given her a CMA.
Thanks for the Halloween treat, there is always a trick!
How can a buyer agent not do a CMA on the property they are writing an offer on??? Apparently they do, because I get the strangest looks from agents when I tell them the first step in formulating a purchase strategy is to know the market value of the property...not depend on some other agent's assessment which are oftentimes way off! Love the post! Great thoughts!
Hi Bryant ~ I agree with the principle of CMA's for buyers, although I don't know that it needs to be quite as detailed as the one for listing a property. I always make sure to research the "competition" and look at similar properties that sold recently before sitting down to write an offer with a buyer. Anything less would be a disservice to the buyer. A buyer, just the same as a seller needs to know exactly what's going on in the market before making a decision.
Great post. I'm another one who's impressed by you incorporating the CMA into the post. Very cool!
BB, I have always performed CMA's for my clients, mainly so I know what the heck I am talking about. Eventually, I will (most likely) be the one listing it. Do I really need egg over my face at that time? Nope.
Yes sir I do it all the time. IMHO one is not performing their fiduciary duty to their buyer client if one does not provide a CMA prior to establishing an offer price.
I think this was an excellent post. Educating your buyers is so important. If they can have the relevant data in their hands they know where to set the expectation level.
Hi, Bryant. This is such good information! Having CMAs makes it more efficient for a buyer to make an offer that is lower then the seller would like because hard facts are hard to refute!
BB - In this market, you can't be playing guessing games when it comes to making offers. Providing a CMA for a buyer is a must to help determine market value. With that informtion in hand we can help them make a better and informed decision when writing up offers. It isn't rocket science, just common sense logic.
BB: Agent representing buyers and Listing agents need to know the market they serve and be able to hit a bulls-eye when pricing and making recommendations for offers. This is a combination of art and science ... and the inability to craft the skill may unquestionably harm a seller and/or a buyer.
BB I've been doing them for years for both buyers and sellers. How could one not? That makes no sense to NOT know the market. We have to know our markets.
BB - I do CMAs for my Buyers, but not all the time to tell you the truth. My first CMA is somewhat condensed and if buyer is interested in making an offer I'll do a full CMA. Please tell TLW to do a "how to" for Scribd - this looks like a very cool tool. Thanks!
Buyer's CMA, Seller's CMA ??? I think they are the same thing. They should all point to a Fair Market Value. How the buyer or seller interprets it can be entirely different.
Hi Bryant -- As a former real estate appraiser and someone who has taken a ton of Appraisal Institute classes in both commercial and residential property appraisal, I spent a TON of time doing extensive CMAs as both a listing and buyer's agent. I tell buyers they should expect the exact same info a seller should get so they can make an informed decision and by flushing things out in detail, it sometimes becomes apparent some properties are way over priced. Sometimes they decide to proceed anyway but at least they have the facts. I take it a step further if warranted in that I will adjust for finished square footage, finished basements, location, amenities, condition, etc., when I can. I track listings that I don't get and almost every single time, it sells for pretty close to what I said it would and I don't end up getting the listing because they listed WAY higher than my recommended list price.
Very cool on the widget in the post, what is it and how did you do it? You should write a blog post on how you put this widget in the post, very, very cool.
If you do not do one of these for a buyer client, how can you possibly be acting in their best interest? Always have done these and always will. Our MLS has a specific template for a buyers CMA so not hard to learn.
considering the problems we had in southwest florida it's hard to believe that a cma was being used as a tool at all. as a lender when there is a low appraisal i always encourage realtors to provide comperable sales supporting the value that they were looking for. most times they weren't even close.
When I worked with buyers, I did short CMA's on any property they were interested in writing an offer on - how else would I be able to justify a price?
Now, I'm much more interested in PDFill and Scribd...any chance of a tutorial on those tools?
Hi BB...I do one and I submit it with our offer when we get into negotiating. It bolster our case and tells the listing agent and seller we know what we are doing.
A CMA is provided when a buyer hones in a property. And thanks for the reminder, because I'm going to update the brochure I go over with buyers at our initial consultation, and I'll include they're provided. Good reminder for me to update that, note to self, thanks.
Bryant - This is a must, especially in my south Florida market. Almost every single one of my clients has been involved in a bidding war at some point.
Hi BB, I agree! It usually doesn't take long for a savvy buyer to catch on to this if their agent has prepared them for it. I counseled a recent buyer to offer more than the list price on the home she wanted. She would only go $5k over and she was outbid. After a repeat on another house, she came in on the next one $20k over and got it. I learned that we beat out the next guy by just $3k, and the buyer is ecstatic. She really did still get a great deal on a house she would have paid much more for a couple of years ago. It will go back up in the next couple of years and she will have gotten a bargain.
I must say, the CMA is impressive - I don't think any Relator has ever provided me with the amount of data in your CMA (certainly not as well organized).
Is this something you would provide to an appraiser as well, or would you modify it?
I always provide a CMA for buyers if I am representing them. Especially in the kind of market we've had the last year/half, it's the only way I really feel confident in an offer price. It's nice that you shared your CMA with us. I can pick up several tips from reveiwing it.
Bryant, sure I too use a CMA for a Buyer. We cannot rely on a list price as to be fair market value. By not using comparables, you can get caught when the Buyer completes an appraisal for their purchase and the appraisal comes in lower than the purchase price. How can one rely on anothers opinion of value. It's our job to educate our Buyers in order for them to make a wise decision.
It's definitely one of the things that I do as a buyer agent, but real estate is local. And in my area, certain price points get multiple offers. Sometimes the CMA shows buyers that properties are sold ABOVE list price, so a low ball offer is not always a good thing.
Bryant, I definitely do a CMA for buyers. There is too much bad information out there telling buyers to make lowball offers and those are the buyers who lose out on the good deals because of their ridiculously low offers - even for this market. An educated buyer is a more successful buyer.
Great advice....a blind squirrel will eventually find a nut, but if that same squirrel had you for an agent he sure would've gone through less headache and effort to find it
I do a CMA for my buyers and then figure out the negotiation strategy based upon how much competition is likely for the listing. With foreclosures you don't have much time and they are usually under deposit in a day or two. It's only natural for clients to want to offer below list price in a buyer's market and it's very hard to convince them to go slightly above list price. I've found that showing them how much they are saving is the only way to get them to come up to a point where they will win the bid over the other potential buyers. I like the way your CMA is designed.
Yes, but not a 'price adjusted" as we would for a Seller. The buyer has to determine how much the amenities, location, etc. means to them. It is a great idea as it helps them formulate solid offers.
I have to say, I'm a bit surprised that buyer's agents aren't educated on preparing a CMA for the properties their buyers want to buy. It's the best way to determine true market value, and thus, how much the buyer should offer.
You also said "My Buyers are counseled to make offers based on the value of the property not the list price". ALL buyers should take a lesson from that statement right there! And all agents should do the same. It can save everyone a LOT of hassle!
I always run a CMA for my buyers but that doesn't seem to matter in this market. Buyers aren't that interested in what the house sold for next door last week. With so much inventory, they all want to low-ball and take their chances. If they don't get the house for their price, they just move on to the next one. It makes it a lot harder to council buyers. I mean, we do want them to get the best house at the best price, right?
I use a CMA for buyers, when preparing to make an offer. I also use the CMA with the offer so the seller and seller's agent can see where we got our numbers.
Bryant.. I can understand in some areas of the country one may want a CMA on all properties. I have done a few. In our area many homes in the neighborhood are simular to a handful of others that have recently sold.
A CMA prepared for a buyer is not an option, its part of my service to the buyer. How many times has a buyer looked at you and asked what should I offer? I can certainly give them a number but why should they trust that my numbers are correct? They trust me because I prepare a CMA and they see it right there in black and white (or in color). What fool would listen to someone on what to offer or what the market value of a home is without seeing proof of what the house is worth.
Sure, I've had buyers who don't care what the comps prove and offer what they want to and some of them have lost the house to another buyer because that buyer was willing to at least pay market value but my buyers can never say that I didn't provide them with the facts they needed to make an educated offer.
Would you go on a listing appointment with a CMA?? You shouldn't be representing buyers without one either.
BB - You said "My Buyers are counseled to make offers based on the value of the property not the list price" - seems like the most valuable advise we can offer buyers in our market. It is a bank's market, not a buyer's market, at least in the mower price ranges. I still find it interesting that some folks jsut feel that they have to start at 10-15% below asking, or lower, no matter what. It won't work.
Bryant, I do CMA's for buyer clients only. I don't like full CMA's for Sellers as I don't want the seller picking me based on a price on a piece of paper....pick me first and then we will discuss the price. I think it is mandatory for buyer clients.
Buyer CMA is a demonstration of your value to them and to the process. The old days of "trust me" are long gone. The decision is theirs but as my slogan says "it's your real estate journey, I am the guide",,,some of us are afraid to guide. I find the legal updates and classes scare realtors into feeling they should be neutral and non committal on matters that could be controversial. GEEZ, why would I need the "expertise" if I don't get to know what it encompasses? Just a question.
BB, those are some great bargain prices out yonder! CMAs are a great way to keep everything intact. It's looking at the facts and not just throwing up any numbers. Nice looking cma you have there.
I never write an offer without two copies. One they've signed for my files and one for their files. Now if we just had some inventory I would be able to use them more often.
Good morning. OK so I'm very impressed that all of you use a CMA for your buyers.
Like Jeff's my market is controlled by the banks. The average property sells for 105% of list price. Any property that is priced properly will have multiple offers almost as soon as it hits the market. In order for buyers to be successful they have to come in with their highest and best offer right from the get go. The CMA helsp them to see this.
The CMA is for their benefit as I already know whatthe property is worth. I just want to show them where I get my information from.
Bryant - I like the way you phrased that - "your buyers are counseled to make an offer based on the value of the property and not the list price." We try to do that as well and do put together buyer CMA's.
It's important that buyers know what the property is worth and don't overpay. You never know when circumstances will change and the buyer may need to sell right away.
I do the buyer CMA's as well as a new seller CMA when an offer is received. These days the scrutiny is being applied by all sides - something that was missing during the run up!
Bryant - I would only do a buyer CMA if asked. I would NEVER recommend a price for the buyer to pay, ever. Talk lawsuit. I WOULD give my opinion when they told me what they decided to offer e.g. seller will faint, might not appraise, etc.
It is always fascinating to me how may agents feel that representation of a Buyer means helping them to offer less than asking. In fact there are those who feel that is there obligation to offer less.
Doing a great CMA is of course helpful. Getting Buyer's through the homes will educate them better than anything else you can do. Having a great web site as well that they can view the competitive homes will also help to educate.
YES! Our market is pretty similar to your market and we need to figure out where we "need to be". I give my recommendations, will write only one low offer for a client before I fire them. When I say "low" I mean below the average and median sold range (assuming property is in good condition.)
It is essential to know the financed buyer isn't overpaying (even if they think it is worth that price they want to pay) if they are not prepared to come out of pocket in the event of a low appraisal (just given our market conditions!)
In our market, the 30 day price IS the price that will get the Seller in the ten percent of homes that sell each month. Agents need to do the CMA for the Buyer to realize how cutting edge some of the list prices may be on the Just Listeds rather than continuously lose the multiple contract scenarios by not doing the research for them or their clients.
Great post and comments. I find it interesting to see how things have changed in my northern NYC surburban area.
I have never been a sub-agent in the 12 1/2 years I've been licensed and represented all my buyers as a buyer's agent. Buyer agency was very tough those first few years - so many misconceptions and virtually no willingness to discover a "new idea" on the part of many agents and agencies.
I was busy printing out comps and educating buyers. This was in the "dark ages" of our MLS before the fancy graphs and CMA packages made our lives so much easier. I was figuring out price per sq. ft. and scribbling all over the place! LOL We don't have many sub-divisions and most areas have older homes that can be very different than the one next door, which made things a little more challenging.
I can't see how one could properly represent a buyer without doing a CMA.
Good Info. As a listing agent I have had 4 escrows renegotiate the contract price because of low appraisals.
Now when I receive an offer for a listing I believe to be over-priced I recommend to the Buyers Agent to sumbint a CMA with the offer to justify their price. Those who listen have gotten their offers accepted - those who didn't have high counter-offers.
In my local market, I carry a CMA in my head and don't even show the ones that are totally out of line with reality. When I first start with a new buyer, I prepare a CMA to give them an idea of what they should really expect in the house that they are qualified for and has the features that they want. (Sometimes, it means drastically having to change their expectations!)
Before writing an offer, I also prepare a formal CMA for that property, and then we work out the strategy to negotiate!
I definitely complete CMAs for my buyers. I feel I would be doing them a disservice if I didn't. That's what a buyers agent is for, to counsel them on their best course of action. Good post, Bryant, and I hope you encourage everyone to use this valuable tool!
I'm in agreement with several of the above comments, a buyer's CMA is part of the service a Buyer's agent should be offering. How can you make an offer without seeing the competition?
How can we do our job for buyers without a CMA? In my market we deal with correctly priced homes, those where the seller says sell but at his price, and those overpriced listings taken by agents who want to be the top dog lister in the market. You know ... the ones who within 30 days begin the price reduction game.
Without a CMA there is no way to help the buyer make the financial decisions for property under consideration.
How can we do our job for buyers without a CMA? In my market we deal with correctly priced homes, those where the seller says sell but at his price, and those overpriced listings taken by agents who want to be the top dog lister in the market. You know ... the ones who within 30 days begin the price reduction game.
Without a CMA there is no way to help the buyer make the financial decisions for property under consideration.
I also use a CMA summary that shows the list/sale price ratio. in addition to all the above info . . . which is great.
If the list/sell ratio is averaging 97% and average DOM is 90 . . welllll buyer might want to rethink that 30% low offer on a week old listing . . . :)
But yes, a buyer's agent's responsibility is to inform buyer of the market value of comparables at the time of offer.
Before I leave the office to go show the homes, I have already researched on MRIS the market values of like properties for each of the homes I'm going to show that day. I have created a simple CMA Format that I can print and attach to each listing. That way when we get to the house, and if my client shows an interest or starts to ask questions, I have all the information right there with me. No need to go back to the office for comps. I have everything they need, as well as a blank contract. Our market here in Prince William County VA is fast. Any Realtor who is not helping a home buyer in this manor and just submitting an offer at a buyers whim, is doing them a huge disservice.
I always provide a CMA to my buyers when they submit an offer. It is one of the services that I routinely provide for my buyers. The better educated they are about the market value of the home they are interested in, the more secure they will feel when they make their offer.
I've always thought it was part of my job as a buyers agent to offer them a CMA. But I have recently learned that it's not a very common practice in my area. It's just one more way for me to differentiate myself I suppose.
I cannot imagine writing an offer without studying comparables. I like the idea of a brokerage requiring s for their records. I keep CMAs in my file, along with other paperwork.
I would be flabbergasted if a buyers agent didn't do a market analysis for their buyers prior to writing an offer. How in the world would a buyer know what is a fair price for the home without one?
Also, I love the ammunition that an analysis gives me should the offered price be much lower than asking price. It's hard to argue cold hard facts when I have them in front of me during an offer presentation.
Bryant, thanks for the excellent post. Buyer CMA's are very important in this market (well, any market really). I can't imagine offering advice to a buyer that ISN'T based on the most up to date information. It would be such a disservice to my clients. I have been trained on how to do CMA's that work great for buyers and sellers. I like to put all the info in a 1-2 page Excel sheet. Then I print the individual listing MLS sheets and attached with them. I want to the buyer to see the figures first, then review the sold properties. It helps them decide what the want to offer by viewing what other similar properties have sold for in the area.
OK so the comments om this post just [prove that the members of ActiveRain are a cut above the regular agent. You guys are almost unanimous about using a CMA with your buyers.
Bryant, I agree, it is very impt as a buyers agent to do a complete CMA for your clients. I have always done this but I have not always presented it with the offer. Thanks for the post!
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