Home Price as a Moving Target
“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 is a moving target, not a static number.
That’s because a skilled, experienced Realtor can easily add 10% or more to a home’s list price.
How?
By recommending strategic, cost-effective repairs; helping their client do smart updates (and avoid dumb ones); expertly staging the home prior to putting it on the market; and finally, skillfully marketing the whole, spiffed-up package thru professional photography, exposure on social media, Realtor networking, flattering brochures, etc.
Once the Buyer appears (or, several of them!), a good agent also knows the legal in-and-out’s of selling a home, and is an aggressive (but fair) negotiator, making sure that their client’s investment of time and money actually falls to the bottom line.
Two. Time investment.
I don’t know about other Realtors, but, depending on the individual home and the price point, it can take me 3-4 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.
Called “adjustments” by Realtors and Appraisers, 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.
Typically, that means spending a couple hours previewing nearby “Active” listings.
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.
P.S.: That time investment is also why, as a Buyer’s agent, I defer doing a CMA until my client has identified the home they want to make an offer on (or at least, 2-3 finalists).
See also, “Realtor Postcard: “Call or Text Me to Get Your Free July 2017 Report on Neighborhood Home Prices“; and “Proper (and Improper) Purposes of Realtor Previews.“
