“Those who know, don’t talk; and those who talk, don’t know.”
–stock market saying
What’s true in the stock market is also true in real estate.
Namely, the value of what Realtors call a “Comparative Market Analysis” (“CMA”) that can be had for free is . . . about what you pay for it.
As I tell prospective clients, there are two reasons I don’t do free CMA’s:
One. A home’s fair market value isn’t a static number.
On the contrary: a skilled, experienced Realtor can easily add 10% to 20% to a home’s list price by recommending strategic, cost-effective repairs, updates, and staging prior to putting the home on the market.
Two. Time investment.
I don’t know about other Realtors, but, depending on the individual home and the price point, it can take me 4-6 hours to do a rigorous (read, “accurate”) CMA.
First, I identify the subject home’s peer group: typically, “Sold” homes that are similar in style and features, that have recently closed.
But, depending on the circumstances, I may also include relevant “Pending” sales and even “Cancelled’s” or “Expired’s.”
No Shortcuts
Next, I identify the key differences between the Comp’s (“Comparable Sold Properties”) and the subject home.
Those include updates (or lack thereof); size (“finished square feet – above” is the key metric for both Realtors and Appraisers); floor plan; curb appeal; and location (within an already narrowed geographic area).
Just as important as isolating the key differences is assigning a dollar value to them.
Finally, I test the price range developed from the preceding analysis against the competition — similarly priced “For Sale” homes.
As Realtors like to say (and I agree), either competing homes help sell your client’s . . . or your client’s home helps sell the competition.
My job is to make sure it’s the former — and that’s not something I can afford to do before I’m hired.
