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How can a seller rely on CMAs to establish a probable FMV when the CMAs presented by 5 different area Realtors range from $390K to $470K? There are no Realtors "farming" the neighborhood where the subject property is located, and the CMAs were all prepared within 10 days of each other by Realtors on the same local MLS.
Second, is it common practice that Realtors do not preview any of the currently available competition to see how those properties compare to the subject property, but use them anyway in their CMAs (the subject prop & the comps in question are not production/tract homes)?
How can a seller rely on CMAs to establish a probable FMV when the CMAs presented by 5 different area Realtors range from $390K to $470K?
This is one of the most difficult parts for sellers. Who provided you with market reports? Who actually analyzed the data? Forget the ones that just give you a print out with no analysis.
Quote:
Originally Posted by shroom
Second, is it common practice that Realtors do not preview any of the currently available competition to see how those properties compare to the subject property, but use them anyway in their CMAs (the subject prop & the comps in question are not production/tract homes)?
I don't preview properties for a CMA that I am doing for a listing presentation. If I did that I would never get anything done. I usually pull 10-15 comps for a CMA. I preface my CMA's that it is preliminary, and then after they hire me, I will take the time to go and do that for a final confirmation of price.
So out here, I don't know any agents that preview before writing a CMA.
In a more informed world, consumers ( home owners) would choose a Realtor based upon who demonstrates the best strategy and plan to market their home, the ability to defend the home's value with current and relevent facts and manage the risks and perhaps most important, communicate with the consumer.
In reality, most consumers are too eager to hear the list/sale price and have a diminished interest in the rest.
Realtors know this and know that if they sustain the owner's perception of his/her home value, they are more likely to close the sale, the sale being, getting the listing. It's human nature to like the person who agrees with you.
It's relatively easy to pull comps to support just about any price. A Realtor can put more emphasis on active comps ( other homes with pricing fantasies) than the facts of closed comps. The Realtor can comp homes in a broader area or not take into consideration , nuances like location, floor plan and devil worshiping alters, in the basement with a 5' ceiling. And sometimes, ignorance is bliss.
There is substantially more to a true CMA than comps and yet that is all many Realtors do. A rock solid and defensible CMA takes 2-3 hours and substantially more, if the Realtor needs to tour/preview the closet comps.
A CMA is a live document. Every subsequent new listing, price adjustment , under contract and closed sale can and does change the market dynamics.
Broker Tours are common in some areas and not, in others. Some Realtors limit the area they work and invest in their local market knowledge. They have toured or shown every property, including active, FSBO, under contract and closed comps.
Other Realtors, especially those working in areas where Broker Tours are not common, may or may not make it their business to see the competition. The ones who do not, tend to rely soley on MLS comps and their pricing recommendation is more apt to be built upon quicksand.
Silverfall gets it. His/her approach is appropriate and redirects the consumer's focus where it belongs, hiring the most competent agent to get the job done.
Most Realtors have never experienced a market like this one. If a Realtor is relying on decades of experience and what worked for them 3 or 30 years ago, they are vulnerable. It's a new market and the old rules don't work. Some seasoned Realtors have adopted and others, not.
The consumer pays a lot of money and deserves the best possible professional representation they can get. A monkey can put a sign in the yard and list a home at any price, in the MLS.
An informed consumer knows what is important and can tell the difference between a monkey and a professional. They smell different.
I just wanted to applaud you for doing this. There is a lot of slop out there that needs to be tidied up. 50 mile range is my neighborhood ? My gated luxury home is in the crack meth lab hood then too.
And please Realtors please, if you are listing a property with a lot of extra upgrades for the subdivision, make sure that a WALK THROUGH appraisal done by the buyers bank is in the contract. A drive by appraisal on such a home can kill the deal for you.
If you are a seller whos home has a lot of extra upgrades, make sure it is in the contract.
If you are selling an outdated dump, don't worry about it. Better your place gets compared by the price per sq footage alone method and you get appraised higher because of the nicer updated, remodeled, added features, homes that sold in your neighborhood.
I don't know whoever it was that thought comparing sq footage alone was a fair appraisal, let alone homes in two radically different sub divisions 10 miles a part.
Since when do laminated counters cost the same as granite, no fence vs fenced yard, new brazllian hard woods vs old green plush, 42" in Maple cabinets vs 30'' particle board?
If this slop isn't corrected, more and more will stop making home improvements because they know it won't be worth it at resale and we will all be living in outdated dumps up the road or we will have to pay cash for the nicer homes because the banks won't appraise them at a value above the comparably sized dumps.
Thanks for making steps to make the corrections you are OP!!!!!! Wish more would follow your lead ASAP.
Last edited by HomeStager; 07-29-2008 at 05:52 PM..
If you are a seller whos home has a lot of extra upgrades, make sure it is in the contract.
If you are selling an outdated dump, don't worry about it. Better your place gets compared by the price per sq footage alone method and you get appraised higher because of the nicer updated, remodeled, added features, homes that sold in your neighborhood.
HomeStager, I can't figure out if your just ranting or trying to give advice but either way it's hard to follow your point your trying to make.
If people are selling an outdated dump they should worry about it.
Oh noooo, Silverfall. I was not implying you were a monkey. You smell just fine, to me.
(I thought you were a she, but did not want to risk it. )
I didn't think you were. I just couldn't resist making a comment to that.
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Wish more would follow your lead ASAP.
