The New CMA Vs The Old Way

By
Real Estate Sales Representative with Keller Willaims NJ 8736639
https://activerain.com/droplet/m5M

The New Better CMA vs The Old Way.

Those of us that have been preparing comparable market analysis for a while know that this report is a compilation of listings available for sale, listings that are under contract and listings that have closed for a specific town, area or neighborhood. Some real estate agents will include expired listings as well.
Unfortunately this is a very myopic view of the potential value of a particular property.
Today buyers are knowledgeable and have available to them the most sophisticated tools to search for properties within the comfort of their residence. This tool is the Internet

Are comparable or similar homes the only competition?
The Internet permits our buyers to easily search and see properties within a radius of a particular point. The buyer is searching for properties lets say within 10 miles of;  place of employment, school, highway, etc. The buyer expands his search area within a radius of what in his/her opinion is a reasonable commute.
This fact makes all the properties in this area competition for a seller, even if the property is not comparable or in a different town.

Do we need to broaden our research when preparing a CMA to  include neighboring towns?
Yes we do! The Internet has made the condo, cape or what ever style property it maybe  within that radius competition, regardless if it is similar/comparable in the same town or not.

What constitutes a better picture of value?

My town, Wayne New Jersey, happens to have a park and ride. For a commuter/buyer, Wayne and its neighboring towns within a 5 to 10 mile radius would be consider for a property search. These properties will all be competing for the buyer's attention.

In my opinion my seller/clients would benefit from a broad viewed CMA with marketing statistics of value. This would be the best tool to help a seller in determining a price range for today’s market and getting the property sold.

Set yourself apart...Think like a buyer.

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Rainer
77,960
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Dolores,

You are on the right track. There is a much better way to "price discovery". First, an agent MUST understand the difference between PRICE and VALUE. You are "getting it". Your CMA includes Value. All the traditional CMA does is try to establish price and not very well.

If all an agent wants to do is establish price then, a traditional cma is the wrong way to go. Price=NOI of the property if it was a rental. Notice I said NOI, then capiitalized to arrive at price.

Keep up the good work.

Oct 28, 2011 06:07 AM #1
Rainmaker
91,993
Dolores "Dee" Mauriello
Keller Willaims - Wayne, NJ
Realtor, Homes For Sale Wayne NJ

Mike, thanks for your insight in this forever changing market. Would you clarify the meaning of NOI?

Oct 28, 2011 07:05 AM #2
Rainer
304,441
Ken Brandon
Coldwell Banker Sea Coast Advantage (Jacksonville, NC) - Jacksonville, NC
Camp Lejeune, Jacksonville, NC

CMAs are just a VERY small when helping the seller determine where to position his home in order to get it sold. CMAs compare similar homes when, in fact, buyers probably could care less if it's one story, two story, new construction, etc...because they are searching all of these based on price. So all properties within the price range shoudl be considered competitiion.

Oct 28, 2011 03:06 PM #3
Rainer
77,960
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Sorry Dolores, NOI = Net Operating Income.

 

Oct 30, 2011 01:09 PM #4
Rainmaker
91,993
Dolores "Dee" Mauriello
Keller Willaims - Wayne, NJ
Realtor, Homes For Sale Wayne NJ

Ken you are so right CMAs are very small....and you don't get the whole picture

 

Nov 01, 2011 04:11 AM #5
Rainmaker
91,993
Dolores "Dee" Mauriello
Keller Willaims - Wayne, NJ
Realtor, Homes For Sale Wayne NJ

Mike, I would love to hear more about determining value using NOI and capitalization....facinating.

Nov 01, 2011 04:12 AM #6
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Rainmaker
91,993

Dolores "Dee" Mauriello

Realtor, Homes For Sale Wayne NJ
Call today for information on Wayne area "Smart Seller Program"
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