Q - I'm listing my house for sale and my real estate agent has prepared a CMA (Comparative Market Analysis) and has suggested a listing price. I don't agree with the listing price. Do you have any suggestions?
A - One of the problems with a real estate agent suggesting a list price is that the seller doesn't know how it was derived and, therefore, doesn't have confidence in the suggested price.
I use two steps for a CMA. The first step consists of reviewing the market. To that end, I use some basic criteria such as number of bedrooms, square footage, lot size, location and so on. Entering this information into the MLS System, for current listings, will provide me with a number of properties with varying prices. I generally print these out - there may be 10-30 properties. I select approximately 3 that are similar to my client's home.
I use the same process for homes that have recently sold and sometimes also for homes that have not sold.
The second step is to lay out these MLS print outs for the seller for current properties, those which have recently sold and perhaps those that have not sold so that the seller can see the context of these selected properties. We review each category and I point out my selections. We discuss the price range and the seller can then assess these selections and see where they fit within a larger context, i.e 10-30 properties.
Showing the seller the context of my selections brings clarity to the seller. Realizing that these choices were not arbitrary selections nor were they biased selections, the seller begins to build confidence in the price range.
When the seller is satisfied with the selections and the price range, I ask the seller to select the price for the home. The seller can determine whether he wishes to be near the top or bottom of the price range or somewhere in the middle. After a few moments, there is generally a smile and a list price.
The biggest advantage of this kind of process is that the seller takes ownership of the asking price. He has seen how it is built, understands it and was a participant in the price selection.
If the market changes and a price reduction/increase is appropriate, the real estate agent has the full cooperation of the seller.
Showing posts with label CMA. Show all posts
Showing posts with label CMA. Show all posts
Thursday, May 17, 2012
Saturday, December 17, 2011
Selling Price
Q - I'm placing my home on the market and trying to establish the selling/list price. I interviewed 3 real estate agents and they provided their recommendations - one of them was $10,000 higher than the other two. Who should I believe?
A -The selling price of a home is a function of the real estate market. A real estate agent can't influence the selling price anymore than a stockbroker can dictate the price of a stock. Agents arrive at a list/selling price recommendation by analyzing similar properties that have recently sold under normal market conditions in the same location.
If the agents left you their Comparative Market Analysis for your information, review the information carefully. They should have selected homes that are similar to yours, in the same location and they should be very recent sales. A $10,000 dollar variation seems large. Perhaps the criteria for home selections was not followed diligently.
Remember that the price at which you list your home is YOUR decision. If your price is too high, your home could be overlooked and if you price to low, you could lose money. Pricing at market value should be your goal. Obtain more clarification if necessary. It is important to be on target.
A -The selling price of a home is a function of the real estate market. A real estate agent can't influence the selling price anymore than a stockbroker can dictate the price of a stock. Agents arrive at a list/selling price recommendation by analyzing similar properties that have recently sold under normal market conditions in the same location.
If the agents left you their Comparative Market Analysis for your information, review the information carefully. They should have selected homes that are similar to yours, in the same location and they should be very recent sales. A $10,000 dollar variation seems large. Perhaps the criteria for home selections was not followed diligently.
Remember that the price at which you list your home is YOUR decision. If your price is too high, your home could be overlooked and if you price to low, you could lose money. Pricing at market value should be your goal. Obtain more clarification if necessary. It is important to be on target.
Sunday, April 17, 2011
What is a CMA?
Q - Real estate agents often advertise that they will do a free CMA. How does that help me if I want to sell my house?
A - A Comparative Market Anaysis (CMA) will assist you in selecting the best price for your home. Your real estate agent uses information regarding current properties on the market and those which have recently sold and are similar to yours in terms of size, location, age and other relevant criteria. This process will give you a price range. Remember that you, as seller, decide what price to list your property. The agent provides you with the information.
There is a second step that I like to recommend. It is good to see the context of the properties that the real estate agent selected. I suggest that your agent give you a print out of approximately 20 properties that are above and below the price range selected for both current properties and sold properties. You can then see where these selected properties fit among all other properties in a wider price range. This reduces any biases that may be present in the selection process and gives the seller an opportunity to see these properties in a larger context.
Seeing the bigger picture, you can then select the price with greater confidence and can make adjustments as the market changes should this be required.
A - A Comparative Market Anaysis (CMA) will assist you in selecting the best price for your home. Your real estate agent uses information regarding current properties on the market and those which have recently sold and are similar to yours in terms of size, location, age and other relevant criteria. This process will give you a price range. Remember that you, as seller, decide what price to list your property. The agent provides you with the information.
There is a second step that I like to recommend. It is good to see the context of the properties that the real estate agent selected. I suggest that your agent give you a print out of approximately 20 properties that are above and below the price range selected for both current properties and sold properties. You can then see where these selected properties fit among all other properties in a wider price range. This reduces any biases that may be present in the selection process and gives the seller an opportunity to see these properties in a larger context.
Seeing the bigger picture, you can then select the price with greater confidence and can make adjustments as the market changes should this be required.
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