CMA prep, validity, & reliability?

[middle-aged mom]

It is not uncommon for people to request a CMA for reasons that have nothing to do with listing their home for sale or when their intent is to sell buy owner.

And many of these people are not necessarily upfront about their underlying motivations- and probably have no idea how Realtors get paid, or not.

Most Realtors, I think, do a walk through of the owner's property before doing a CMA and then produce a result, ranging from basic comps to a full blown CMA, requiring many hours of time and effort. It's not too difficult to imagine that a Realtor could waste an entire week doing what amounts to pro-bono type work for people who have no intention of using their services. It then becomes a part of the Realtor's cost of doing business. And in like all businesses, the cost of doing business becomes a part of the cost consumers pay for all products and services.

[DavePautsch]

I take a little bit different approach I think.

First of all, I try to actively preview homes on the weekly Realtor Tour in our area. I attend the weekly marketing meeting (pre-tour) and think I have a good idea of what the local market has for sale.

When I receive a request for a CMA, I approach it by looking at the recent SOLD comparables (many of which I may have been in). Armed with that data I can usually come up with a broad range that the home will fall into with regard to price.

Then I gather data on the general active market in their price category AND the market for homes that are similar in character to the subject property. Again, I know many of these homes from actively touring (that's why I generally only list in the area I know).

When I sit down with the sellers to discuss our marketing plan I talk about THAT - not the price. I try hard to get them to understand that the price is part of the marketing plan and THEY need to decide where they want their home positioned in the market...I try to keep the discussion AWAY from what the house is "worth" or how much they've got into it.

I've said in this forum many times: There are only 2 ways to determine the absolute value of a home - (1) the price that a qualified buyer is willing to close escrow at or (2) the price that the seller is willing to continue owning it.

Tax assessments, CMA's, and even appraisals do NOT give you either of the above 2 determinants...they are tools (yes) but none of them account for the emotional component of either the buyer or the seller in getting the home sold.

My last thought is that 5 CMAs from 5 different agents with a broad price range like you were given - go with the low one...its likely the one that will put the SOLD sign on the front lawn. It also means you have found an agent who is probably willing to tell you what you NEED to hear vice what you may WANT to hear.

[middle-aged mom]

Originally Posted by DavePautsch

When I sit down with the sellers to discuss our marketing plan I talk about THAT - not the price. I try hard to get them to understand that the price is part of the marketing plan and THEY need to decide where they want their home positioned in the market...I try to keep the discussion AWAY from what the house is "worth" or how much they've got into it.

I've said in this forum many times: There are only 2 ways to determine the absolute value of a home - (1) the price that a qualified buyer is willing to close escrow at or (2) the price that the seller is willing to continue owning it.

Tax assessments, CMA's, and even appraisals do NOT give you either of the above 2 determinants...they are tools (yes) but none of them account for the emotional component of either the buyer or the seller in getting the home sold.

More good stuff, Dave.

The OP brought in 5 agents and got 5 different numbers and quite a spread.

My gut also tells me the agent with the lowest number is likely to be more on target than the rest and that agent risked telling the owner what he/she needed, versus wanted, to hear.

I would use the low number as the start point and then determine which comps used by the others produced the deviation. Are they older comps? Are they active comps? Are they in the same neighborhood?

Or perhaps the subject property is truely a one of a kind and it's a wild card.

In any event, there is a reason for the variance.