Assisting your client in determining the value of a home is one of the most important Realtor responsibilities. You provide the seller with a CMA so that a wise decision of what they should expect to receive on their home. Will this move make sense, can be afford to make it, do we need to seek a short sale? We help the buyer understand the realistic value of a home so they can make a wise purchase decision and also understand if they will have a possible appraisal issue. So many financial decisions are based off your analysis. Upfront dollars are sometimes at risk based off of your input.
As an appraiser, I have the advantage of years of experience in valuation which has been an extremely valuable asset for my clients. I have had the opportunity to teach classes and assist other Realtors with their valuation issues. I have negotiated on offers that information I submitted regarding the value has helped my sellers achieve higher prices for their homes. The understanding and defending of value takes your negotiations to a more professional level.
I have found a common thread over the years of why home values are flat out missed.
• Agent uses a price per foot analysis and fails to at least screen the data to remove homes that are not comparable to the property (homes with negative views, pools, positive views, condition)
• Failure to give credit for condition - that can work both ways, good and bad.
• Jumping to pull in sales from an area that the homes are not the same quality - location is not equal.
• Site size and amenities - highly treed well groomed home sites are generally worth more that a bald lot. Recognize the premium or lack thereof.
• Features in a home - granite counter tops, built-ins, upgraded appliance, etc. bring value over a home that does not have these items.
• Smell - If a home has an odor issue, no matter how gorgeous, it will sale for less.
• Flooring - different quality should be recognized and given credit - laminate floors versus handscraped wood floors, newer larger modern installed tile versus old small squares with outdated grout and color tones.
• Older homes - did the updating maintain the integrity of the era and compliment the housing type?
• Pools - like ice cream there are different types, a small lap pool is not the same as a large diving pool with spa. Learn to discriminate for the differences.
• Location - make sure if at all possible to pull sales from the same neighborhood, same school attendance area, etc. One variable difference can be key.
• Additions - including an enclosure as the same price as the original dwelling when it is not the same quality of finish. These types of improvements generally receive a contributory value.
• Elevation of the home - architecture design is important and a factor of quality. A more modern home has one buyer type and a Tudor home another. Stay like with like.
Stucco home, wood home, and brick home - compare similar home building types. A log home versus a brick home may have a different value acceptance in the market.
• Proper square footage - if you doubt the correct square footage of a home and do not have a past appraisal documenting the size, get it measured. This may save an appraisal issue if the home turns out to be much smaller than thought.
• Don't just look at sold sale information but also Active and Pending Sales in the area. This will help price position and understand the current market.
• Sold sales going back 6 months is best but a year may give some insights to specialty areas or homes.
The key to a proper CMA is use common sense. Ask yourself the question - "if I were to take a buyer out to look at homes are these all homes that would appeal to the same buyer audience". If it is yes then there is your competition. Keep your eyes open and take notes of the all the features or issues a home has to overcome. Price cures all! Understanding and proper care to give out good analysis and information will make you a standout professional and save a lot of wasted time and emotion.