Residential Real EstateWhat Is Your Home Worth?
When you are interviewing REALTORS® to market your home, you"ll be
introduced right away to a priceless document - the comparative market
analysis(CMA.) This is one of the areas in which the real estate industry
really earns its keep - by showing you in black and white what your competition
is. But like a sword, it is a tool that can cut both ways. You and your agent
will use the CMA, among other tools, to determine where your home will stand in
comparison to others which are on the market, and those which have recently
sold to determine the highest possible asking price. Your buyer will use it to
find ways to reduce his or her offer.
CMA"s are about facts which can be qualified and quantified. The CMA is
typically designed to give quick capsules of information such as number of
bedrooms and baths, approximate square footage, size of major rooms, amenities
such as fireplaces and pools, age of the home, property taxes, listing agent
contact information and more.
CMA"s can include homes that are currently for sale and those which have
recently sold. They can go back in time as long ago as a year or a month or
week ago. CMA"s can cover areas as narrow as one or two streets surrounding
your home, or as broad as an entire subdivision.
What is not included in the CMA are those factors that affect perception,
and that is the key difference between why one home with identical features
will ultimately command a higher price than its twin. Perception alters
reality, and this is a crucial consideration in understanding the buying and
selling process and the value of the CMA. Much of a home"s value will
ultimately be determined by the emotional impact it has on buyers. These
emotions are based on subjective elements such as drive-up appeal, interior dec
or, colors, views from the windows, light, darkness, room flow, and hundreds of
other factors.
At the end of each home"s information on the CMA report there will be a
brief statement provided by the listing agent. This statement is usually a
combination of fact and subjective opinion, and will generally cover selling
restrictions or selling points. It could be anything from "seller"s agent must
be present at all showings" to "kitchen and master bath completely remodeled
in 1997" to "Charming! Must see!" (Keep in mind that Realtors are salespeople,
self-employed and have individual styles of marketing and that some will be
better at writing CMA reports than others.)
For privacy reasons the CMA that is offered for public consumption does not
list every piece of information that has been obtained by the seller"s agent.
It will give the what, when, where, but it won"t give the who (the seller"s
identity) and the why (why the home is being put up for sale.) The reasons are
two-fold, to protect the seller"s privacy and to keep from inadvertently giving
the buyer an advantage in a distress situation.
The CMA is clearly a selling tool, but like any tool, it doesn"t work very
well by itself. It takes a skilled person to be able to use it. For this reason
, the CMA will always need to be interpreted by a professional or with complete
objectivity by the seller or buyer.
Remember that the CMA is also a buying tool; it is taken just as seriously
by the buyer and his or her agent. As you and your agent are going to use the
CMA to ask the highest possible price for your home, the buyer is going to use
it to find reasons to either choose or eliminate your home, and to arrive at
the lowest price possible.