Introduction
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Real estate agents rely on their reputation to ensure a thriving business.
It’s critical to demonstrate your expertise to potential clients. When
working with a seller, preparing a professional, comprehensive
Comparative Market Analysis (CMA) is a critical component of the listing
appointment. This guide is designed to help you stand out from the
competition and prepare a CMA which not only gets you the listing, but
sets up your seller for success.
Find Comparable Sales
The first step in preparing your CMA is finding the best comparable
property sales to use in the analysis. Using the same criteria as a
professional appraiser would use, start by looking for homes which sold in
the last 6 months or so within the same tract or subdivision, if possible.
Search for homes with similar characteristics, such as square footage, lot
size and number of bedrooms. If the subject home has any unique
features, such as a pool or view, comparable properties with these
attributes will be the best option as well.
Choose The Appropriate Comps
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Now that you have a selection of homes from which to choose, it’s time to
evaluate them for use in your CMA. Not every home you find need to be
used in the report; you want those which most closely resemble your
subject property in order to accurately predict the list price. Weed out
those which are clearly not appropriate, such as homes in poor condition
or location. Then evaluate the rest based on date of sale and features. The
goal is to use the most recent sales which most closely compare to the
subject home.
Make Adjustments
Before you generate your CMA report, you must adjust values based on
actual conditions and features of the home. Your CMA must account for
variances in size, location, upgrades and other features. A turnkey home
might sell for thousands above one of the same size which needs new
countertops and carpet. A pool or outdoor kitchen will also add to the
price tag, as will the location and view of the home.
If you’ve been working in your market for a long time, making these
adjustments might be second nature, but if you are new to CMAs, here are
a few ways to find the adjustment values you need.
• Ask your broker – Your broker or other experienced agent is a great
place to start; they are there to help guide you, don’t be afraid to ask for
help.
• Google it – There are some good online resources which can help you
determine approximate sales value for home features.
• Go to the pros – Ask a local appraiser for help if you know one or speak
to your preferred lender; both of these have experience justifying property
values.
Tips for Making Adjustments
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Now you’re ready to run the report. Using the automated system provided
by your MLS, add the subject and comparable properties and run the
report. Once completed, you’ll have an estimated value for your potential
listing.
Provide Professional Analysis
Now it’s your time to shine and demonstrate your value to the prospective
seller. At the end of your automated report, there should be a page to
provide your professional assessment of the subject property and suggest
a listing price. As a professional, you must take into consideration the
overall real estate market in the local market. Are property values on the
rise or are they declining? Discuss the current inventory, what are
comparable listing prices and how long have they been on the market.
This must be part of the discussion regarding listing price.
Run the CMA Program
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You are ready to present your report. Even in the smallest of markets,
likely each agent will present different CMA values and pricing
suggestions. You separate yourself by proper preparation. Understand
your CMA and be ready to discuss not only how you chose the homes you
used, but also what the report really says about the potential listing and
expected sales price. By this time you should be able to set the right
expectations about listing price, sales price and how long the seller
should expect the home to be on the market.
By careful preparation and professional presentation, a well-crafted
Comparable Market Analysis will help you and your business excel in the
competitive real estate field.
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