Understanding a real estate Comparable Market Analysis (CMA)

At its core, real estate is all about valuing properties. Sellers want to list their home for as high as possible, and buyers want to get a great deal on a property that will only go up in value.

So if it all comes down to value, how can we gauge property value without paying for an extensive appraisal?

I’d like to introduce you to the Comparable Market Analysis, or CMA as you’ll commonly hear it called. CMAs are professionally generated value estimates based on hard facts of home sale data – not speculation or subjective guessing. It follows a particular format and structure that is similar – but not identical to – a more intensive paid appraisal that banks or lenders conduct.

CMAs have a lot of utility for both buyers and sellers. For sellers, it's the first step to getting a realistic range of what price your house may sell for in today's current marketplace. It’s important to note that it’s not a definitive “answer” as to what your home is worth, but a possible range depending on certain tangible variables. With a CMA, homeowners can see a general range of what their home is worth and also gauge the competition if they decide to sell.

For buyers who are interested in a property, a CMA gives them access to hard data for which they can base their price if they decide to write a purchase offer. It also confirms or double checks if the listing price the seller chose is accurate, realistic, and fair in today’s rapidly evolving buying and selling environment.

But if you’ve ever received a CMA – possibly in an email from your Realtor – it might just look like a lot of data and numbers at first glance. So let’s dissect the parts of a CMA one by one and explain how to read it properly.

Here’s what you’ll see in a CMA:

-On the cover of the CMA, you’ll see the subject property address listed along with an overhead photo of the dwelling and its surrounding neighborhood from GoogleEarth.

Where do these properties come from and why were they chosen for this CMA? The real estate agent that produces this CMA for you hand selects properties that they think are similar to the house we’re trying to value. That means we’re comparing single family residence to the same, condo to a condo, etc. and not comparing a halfplex to a duplex, etc.

Ideally, the properties in the CMA that we’re comparing to have sold recently – usually with 6 months or less as a rough parameter. The more recent the home that sold (or is pending or listed, etc.), the more relevant that price will be for comparison purposes.

Likewise, we want to compare the subject property to homes that are in the same neighborhood, as the price for the same 2-bedroom, 1-bath, 1,000 sq ft. structure could either be dirt cheap or sky high depending on the quality of the neighborhood. So to be as accurate as possible, we want to compare to homes that are in the same area, usually within half a mile or so, with most credence given to the homes that are on the same street or closest.

It's important to note that this isn't a perfect science. Sometimes, there are dozens of comparable properties to choose from that are right on the same street and have sold within a couple of months. Other times, you may have to go a mile or two out and further back in time to find enough similar listings for an accurate CMA.

But what we don’t do is “cherry pick” certain properties just to justify a higher or lower price – that doesn’t do the buyer or seller any good and just wastes everyone’s time because the results will be skewed.

-You’ll see a Map Of All Listings which displays pins on all of the listings the CMA is based on (properties as similar as possible to the subject property.) These will be color coded as active, pending, or sold listings.

-The Summary of Comparable Properties then breaks down those properties, grouped by active, pending and sold listings. Of course, sold listings hold more weight when factoring a CMA because their sold price is a matter of fact, where pending listings might sell for less. Since anyone can list their home for any price, active listings bare the least influence on the CMA.

In this Summary of Comparable Properties, data like the number of bedrooms, bathrooms, year built, square footage, list/sold price and sold date are all documented for each property.

-In the next section, a full CMA will go into further detail in an expanded view of each property with more information like year it was built, the lot size, photos, and agent remarks that are useful for understanding repairs that need to be made, upgrades that could boost the value, whether it’s a rental property, and many other comments.

-Comparable Property Statistics

Now we’re getting into the portion of the CMA that gauges the hard data of the subject property lined up with our chosen comparable properties. 

For each of Sold, Pending, and Active listings, the lowest, highest, and average price will be documented, as well as the average Days On Market. This information will be displayed as a bar graph and then also charts.

So now you have a thorough statistical analysis of your subject property compared to sold, pending, and active listings that are in the same neighborhood and approximately the same size, type, bedroom and bath composition, etc.

You know which listed homes sat on market for a long time before selling, and which were snatched up by eager buyers and sold quickly.

With all of this data displayed in several different forms side-by-side, you can easily judge you’re the subject home’s potential value based on a tight range, no matter if you’re selling your home or looking to buy one and want to make sure the price is fair.

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Do you still have more questions about CMA's or your home's value? Contact us! 

15 Home-selling mistakes that could cost you a lot of money.

If you’re thinking about putting your home up for sale, there is a lot that can go right in this market, as buyers are out in droves and red-hot demand pushing prices upwards for those smart enough to list their homes. But before you get a big closing check in your bank account, you should consider that there are some things that can go wrong – and how to protect yourself from making those errors. Here are the 15 biggest mistakes you can make when selling your home. After reading this, you’ll be ready for a smooth, efficient transaction that gets you top dollar for your home!

Mistake 1: Trying to sell your home by yourself

Without fail, there will be some homeowners who try to sell their homes, thinking it will save them money by not paying a Realtor. However, statistics prove this doesn’t work out in their favor, as the average For Sale By Owner home sold for $210,000, but the average home sold by a Realtor goes for $249,000 – a difference of $39,000, or 15.6% of the sale price! What’s more, FSBOs sit on market at least 19 days on market longer IF they sell at all, as 20% of FSBOs are taken off the market and relisted. With those facts in mind it’s no wonder 87% of homeowners choose to use a real estate agent to represent them, while the others keep making this costly mistake.

Mistake 2: Pricing your home unreasonably high

This is probably the most common selling mistake, though it’s perfectly understandable that everyone wants to get as much money for their home as possible. But homeowners would be wise to carefully consider the facts and statistics about the market and values of similar properties, not speculation or feelings. Remember that if a home doesn’t sell at all – or sits on market an unusually long time – it will cost the homeowner far more than they ever stood to make with an unreasonable price bump. The good news is that you can start with a listing price on the higher end of a reasonable spectrum to test the market, and lower it incrementally at designated points if it doesn’t sell or there aren’t enough showings.

Mistake 3: Fixing up a property too much before listing

Of course you should make necessary repairs before listing your home, but sometimes, over-conscientious homeowners go too far and start undertaking extensive remodeling projects. Unless they are cosmetic fixes, these won’t even come close to paying for themselves when the house sells, costing you time and a lot of money. In fact, even the repairs that offer the best return on investment – exterior siding, a new front door, a new garage door, or a mid-range kitchen remodel – only yield about 70 cents for every dollar you spend. And many of repairs will only get you back 30 0r 40 cents for every dollar out of your pocket! It may seem like a fine line between sprucing up and fixing certain things compared to what repairs aren’t cost effective, but we can walk you through it and offer recommendations.

Mistake 4: Making it to hard for realtors to show your home

How easy will it be for other real estate agents to show their eager buyers your home? If you decide it’s only accessible between 5:45 and 6:30 PM on Mondays, Wednesdays, Fridays and every second Saturday morning, you have a vicious barking dog roaming about, or the buyer’s agent needs to call three times to set a special appointment to see it, chances are they’ll move on to the other twenty houses on their list – which are simple and easy to see! Help the people who are working hard to get your house sold (and yourself!) by putting a lockbox on the property with standard and reasonable showing instructions.

Mistake 5: Not cleaning and de-cluttering your property

The very first thing you should do BEFORE you even have a Realtor over to sign the listing paperwork is go through your home and remove clutter, excess items, and a good deal of personal effects. It’s ok to leave some things, but the less you have in any room (absent of it being completely empty), the bigger and more airy it will look. Likewise, shelves, countertops, and even closets look much bigger and open when they only have a few essential items on them. With a warm but minimal presence, it will be easy for potential buyers to project their own personal things on the space – and actually envision their family living there. Once you’ve gone through and put about half or more of your items in storage (off site – not in the garage or crammed in closets!) then go through and give it a meticulous cleaning, or even better, hire a professional cleaning company that will scrub corners, whiten grout, and make your home look like new.

Mistake 6: Not getting professional listing photos taken

If an image is better than 1,000 words, then having the clear, stunning, and high-quality photographs of your home can boost your online viewings, potential buyers, offers, and even your sale price immeasurably. Therefore, I highly recommend that we arrange a professional real estate photographer to come in and present your home in the best light, and for higher-end or luxury listings, even employ a video tour and possibly aerial drone photos. 

Mistake 7: Not disclosing everything

Possibly the biggest mistake a home seller can make is not properly and honestly filling out their disclosures. Seller knowledge (or even suspicion!) of any material defects, problems, and issues with the property – or the neighborhood – WILL come back to bite you in a big way, jeopardizing any transaction and possibly even landing you in court. It’s always best to be 100% forthright and up front with your disclosures, and we can usually solve many of these concerns before they become problems by ordering the appropriate reports, making repairs, and providing in-depth research to the potential buyers. 

Stay tuned for part 2 of this blog, with the final 8 home selling mistakes!

10 Costly mistakes sellers make when pricing their homes.

1. Being too emotional.
We understand that your house is your home, where you raised you family and have a lot of your life invested. But selling your home should be viewed as a business transaction, not personal. By taking emotion out of the process as much as possible, you’ll make clear and rational decisions in your best interest. Ask any successful businessperson and he or she will tell you that emotion, fear, anger, ego, and personal feelings end up costing you money!

2. Pricing it unreasonably high.
Of course the ultimate goal is to get as much money for your home as possible when it sells, but that’s not going to happen if it never sells! There’s nothing wrong with starting with a listing price on the higher end of the spectrum but home owners need to realize that the higher the price, the fewer potential buyers you will get and the longer it usually takes to sell, if at all.

3. Ignoring the “price tag” test.
Let’s say you walk into your favorite store and pick something beautiful up off the shelf. What’s the first thing you do? Look for the price tag. If it’s too high, you cringe and put the item it right back on the shelf. If the price is significant but fair, you may look it over a while as you deliberate the price versus value. But if it’s on sale, you run to the register before someone else snatches it up! It’s the same thing with selling your home. When your priced way too high, people aren’t even going to look at it, or put it right back on the shelf. That means no offers. You want your price to be in that midrange where it’s fair for the value so you attract plenty of buyers but also get the most money possible.

4. Not sparking a bidding war.
Sellers often forget that one of the best strategies is to price your home aggressively to create a bidding war. Psychologically, our consumer behavior is dominated by a fear of loss even more so than the hope for gain. Put simply, that means people will move, act, bid, offer, hustle, risk, and do just about anything to ensure they don’t lose out on a great deal. By pricing your home a little lower on the range of what’s fair and reasonable, you create a massive sense of urgency with potential buyers. They know others are looking at this great deal and they need to put in the highest possible offer to get the home. You’ll probably get multiple offers, which can be leveraged against each other to bring the listing price up even more. Done correctly, a bidding war will get your home sold quickly and yield fantastic offers – often well over asking price!

5. Not listening to the market.
When we list a home, we do a comprehensive market analysis to present to the seller, showing the hard data exactly what similar homes in the same area are selling for, as well as what other competition is out there. We’ll make our best professional recommendation on the listing price, but the final decision is up to the homeowner. No matter where you set your initial listing price, pay attention to what the market is telling you – what the data says. Ignoring this and making decisions on emotion, fear, or hope for gain can be very counterproductive and cost you in the long run.

6. Not realizing price reductions can work to your advantage.
Price reductions are often viewed as nails-on-chalkboard negative by home sellers, but in fact they are a valuable strategy that ensures they yield the highest possible sales price. When listing your home, we should set an initial price aggressively but also map out a strategy and timetable of price reductions. If there is little interest or offers within a certain time frame, it’s time to reduce the price until we find the “sweet spot” of price vs. value! Once you price your home in that sweet spot, you’ll get plenty of quality offers at the best possible realistic price, and actually close on the transaction. Handled correctly, price reductions are a great tool to test the market incrementally, create momentum, and make sure every possible dollar lands in your pocket when it sells.

7. Forgetting to think from a buyer’s perspective.
Instead of thinking, “This is what I want for my home,” and “I want to sell at this price,” try to put yourself in a potential buyer’s situation. Imagine yourself hitting the home buying circuit on a busy Saturday and how you would view each listing. For instance, buyers usually start from the bottom of their price range and then work their way up, and as a home seller, realize they will be viewing a lot of other listings in the same price range as your home – your competition. Understanding the process from a consumer’s perspective will help you strategically set your price to get the highest and best offers from those busy buyers!

8. Pricing it based off the wrong comparables.
Homeowners are eternally optimistic when it comes to selling their home at the highest possible price, but often times they are using incomplete or irrelevant data to make those decisions. You’ll often hear people say, “My neighbor sold their house recently and it went for XYZ price, so mine should at least be worth that, if not more.” But crunching the numbers, we might find that their neighbor’s house was much larger or sold two years ago. When gauging your home’s value, look for comparable sold properties that were most similar to yours in square footage and amenities, close or in the same neighborhood, and those that sold most recently. That should give you the most accurate representation of what the fair and realistic listing price should be.

9. Forgetting that the home will need to appraise.
Remember that a buyer can make any offer they want, but they most often will need to get a mortgage loan from their partner in the home purchase – the bank. The bank, looking to ensure their investment, will require an appraisal. Appraisers are in the business of rationally and logically valuing homes based on every possible factor, and know the market better than just about anyone. So when you set your listing price, remember that what you want for it isn’t as important as what it will appraise for – which sets the ceiling on what any buyer can and will pay.

10. Trying to inflate the price based on upgrades.
You’ve probably spent many weekends fixing up your home, painting, installing new tile floors, and upgrading all of the light fixtures. While these improvements do enhance the value of your home, don’t expect to get back what you put in dollar-for-dollar. Some upgrades pay off big – like remodeling kitchens and bathrooms- but you can’t automatically tack on the price of all renovations and upgrades to your listing price and expect the seller to go for it. They will, however, make your home much more attractive to potential buyers when you list the home, and that will yield more offers at higher prices.

35 Creative ways to improve your home's curb appeal.

1.         Hide your garden hose in a nice pot.

Unsightly garden hoses and spray nozzles can easily be coiled and stored inside of a big ceramic pot or planter. 

2.         Reface your foundation.

If you have a plain and boring concrete or stucco foundation, add faux or half bricks, tiles, or faux stone to turn a negative into one of its nicest features.

3.         Highlight your address numbers.

Instead of small black letters near your front door, why not get creative with larger letters built into in a false rock, concrete column or stone feature with built-in lighting.

4.         Add a pathway.

Build a pathway to your side yard or driveway with mulch, stone, great plantings, and stepping-stones.

5.         Install shutters.

Nothing makes the face of your home look better than nice shutters outside each window.  Look at plenty of color patterns but try a glossy paint with deep, dark colors like black, crimson, or hunter green. 

6.         Get a new front door.

Replace your humdrum front door with a classic stained wood or modern full window door. 

7.         Add window boxes.

Remember those shutters we put up?  Follow that up with box planters outside each window (or just the second floor) with colorful flowers.  Stained wood or bright paint looks great on these.

8.         Plant vines over unsightly areas.

If there’s an area of the house that isn’t particularly nice to look at – like if it has utility poles, boxes, or lines – you can simply put up a vertical trellis in front of it and plant some vines. 

9.         Build a trellis above the garage door.

Let’s face it – garage doors are ugly.  But an easy weekend project of building a nice trellis over it, complete with interwoven vines and some accent lighting, and your garage will be the envy of the neighborhood. 

10.       Paint your front door.

Don’t worry if your budget doesn’t allow for a brand new front door – you can repaint your existing one!  To make sure the new layers of paint don’t keep it from closing properly, you might want to sand it down some before applying primer and paint.  Match this too your shutters with glossy paint.

11.       Create a container garden.

Our first instinct is to plant everything in the front yard, but it’s way easier (and looks really cool!) to mix and match fun, funky, and colorful containers to hold flowers and plants.

12.       Update your mailbox.

Just like your address numbers got a makeover, spruce up your mailbox.  Instead of having it hang by your front door, build a classic wooden pillar and have it sit out on the street, or wrap the base in brick or stone.  Build in a sturdy mailbox but make sure it locks.

13.       Set up a sitting area.

It’s amazing how inviting a front porch or front yard looks with some simple outdoor furniture so you can sit outside and enjoy it.

14.       Update your front porch light.

Replacing outdated lighting with new, modern lighting is a great way to improve curb appeal without breaking the bank.

15.       Replace your garage door.

Trade in your dented and dated garage door with a gorgeous wooden carriage door or faux wood door.  You can even get these to open horizontally to complete the look of a million dollar mansion!

16.       Fix up your garage door .

If you don’t have money to replace it, you can have a row of horizontal windows cut into your existing door and add screw-on hardware that makes it look like a classy carriage door.

17.       Add new hardware to your front door.

Add a new knob, big brass knocker, and brass kick plate to any front door to make it look brand new. 

18.       Add an archway.

Build an archway on the way to the front door and cover it with vines, colorful flowers, and cool lighting.

19.       Paint the exterior.

You may not want to paint the whole house, but there’s nothing wrong with painting only the front, including a three-color pattern with the trim and the front door and shutters different colors.

20.      Paint over concrete steps or porch floor.

Paint old and weathered concrete steps or a porch with dark and glossy paint.  Black looks great, but remember to prepare the concrete well first and use specialty mason/floor paint because of the high foot traffic. 

21.       Power wash.

Rent a power washer for the day and spray clean your house, your roof, inside gutters, stucco, walkways, and your driveway.  Just remember to wash from the top down so you don’t create a bigger mess.

22.       Replace your welcome matt.

Don’t forget that something as simple as a new, colorful, and personalized welcome matt can make a great first impression.  You can even build your own out of painted wooden slats!

23.       Wash windows.

Take out the Windex and the old newspapers (better and less expensive than paper towels) and give your windows a good washing – they’ll really sparkle!

24.       Plant a tree.

To break up a monotonous lawn, plant a tree and surround it with a mulch bed and other lower plants or flowers.

25.       Upgrade your porch railing.

If you don’t have money for a brand new porch, you can replace the posts and spindles and repaint to make it look new.

26.       Add edging stones to your driveway.

I love this look – instead of a boring asphalt driveway butting right up against the lawn, set in edging stones, pavers, or bricks along the way.

27.       Hang outdoor curtains.

Outdoor fabrics are weather resistant and sheer enough to let light in, so use them as outdoor drapes hanging from your overhang or porch ceiling with tiebacks.  The neighbors will rave about it!

28.       Outdoor chandelier.

While you’re at it, replace your boring overhead light fixture with an outdoor chandelier to make your front porch look like the foyer of a million dollar mansion!

29.       Add lights to walkway.

New landscaping lighting along pathways gives your home that welcoming glow at night.

30.       Hang string lights.

Wrap trees, posts, and front porches with strands of white outdoor lights.  The key is being subtle so it doesn’t look like Christmas!

31.       Put up hanging plants.

You can make any porch pop by hanging pretty flowers or lush ferns from pots suspended from the ceiling, complete with their own mister watering system.

32.       Rip out the lawn.

Replace the front lawn with natural landscaping and symmetrical flower gardens to give it an organic, modern look.  You can even have fun and recreate the beach with small crushed gravel that looks like sand, “beachy” grasses, and seas shells and starfish scattered around!  

33.       Put a bench in the garden area. 

Simply adding a sitting area can add curb appeal.  Don’t be afraid to go with something bright and fun.

34.       Add elements of water.

A fountain, water feature, or koi pond makes a great signature piece in the front of your home.

35.       Hang a porch swing.

There is no better way to add curb appeal – and even add value to your home – with a hanging swing on your front porch.  A nice one isn’t too expensive and you can easily attach it to a strong beam with chains or thick ropes.  It will add instant charm to the front of your house!