|
|
Did You
Get A Good Market Analysis?
Author: R. Ward
A comparative market analysis (CMA) is the most
important,and, should be the first skill that any real estate
agent learns how to do well. A CMA should be used to determine
fair market value for a home based on certain conditions.
The conditions for determining fair market value are that
you have a willing buyer, a willing seller and no undue pressure
on either party. This is market value. Not what the seller
or agent or buyer feels like the value is, but instead, what
buyers and sellers have actually paid for similar homes. After
all, whether the real estate agent is representing you in
listing your home for sale or representing you in the purchase
of a new home, what could be more important than the value
of the home?
Surprisingly, most real estate agents that I
talk with can not perform this step in a meaningful way. As
a REALTOR you should be able to demonstrate your understanding
of the value of a home in the current real estate market and
be able to convey your findings in a repeatable way and find
similar results. The one caveat is that unlike most items
within your home like a coffee maker or a television, a homes
emotional value cannot be quantified exactly. This is what
the purpose of a CMA should be used for - to eliminate (from
a seller) any unrealistic expectations that they have about
the value of their home and for a buyer to demonstrate what
a fair asking price for a home should be.
There are certain statistics that should be
used while compiling a thorough market analysis. Here is the
information that I use for my Comparative Market Analysis.
I will use an example of a CMA that I would put together on
behalf of a seller.
At the first meeting with a seller we will walk
around the property and take notes of the condition, benefits,
features and location of the home. Before leaving I will ask
the seller if there are any additional items that would make
this home better than a similar home nearby. After all, they
have lived there and would know the home better than anyone
else. Upon arriving back at my office I would begin to gather
information about other homes that have recently sold that
are similar to the sellers home. I will use between three
and five homes as comparable properties depending on how much
variance there is with the sellers home. From these sold homes,
I will make adjustments to the price of each comparable to
equalize them to the sellers property. After making adjustments
based on square feet, location, amenities, lot, parking, condition
and various other items I will look at the current active
competition of homes similar to the sellers home to gauge
the competition. I will try to use three actively listed homes
to base my comparison on. The third comparison item will be
to find homes that are similar to the sellers that were listed
recently and failed to sell. This data will be analyzed to
determine possible reasons for why the homes did not sell.
Often, it is because the seller was asking to much for the
home. Finally, no market analysis is complete without a thorough
examination of the real estate market that the seller´s
home will be listed for sale in. If it is a $500,000 house
in an area with lots of records of home sales between $400,000
and $600,000 this would be the market I would analyze. This
analysis will include sold homes, expired homes, days to sell,
list price to sold price, active listings, homes sold in the
last 30 days and the absorption rate of all homes currently
listed. This will be used to determine the current market
conditions your home will be listed in. All of this information
will be put together to provide you with a pricing summary.
The pricing summary is where I will recommend a price range
that I suggest your home should be listed in. Pricing your
home at the high end will bring few buyers, if any, and pricing
it at the low end should result in a faster than average days
on the market sale.
That´s it. The process can take anywhere
from 1 hour to 5 hours and sometimes longer if I feel that
there is a need to go and preview some of the homes in the
report that I have not already seen. The report will include
pictures of the homes used in the analysis as well as tables
and graphs to illutrate items where necessary. It will then
be bound and presented to the seller upon our second meeting.
Before you list your home for sale or purchase
a new home, you should ask for a comprehensive market analysis
similar to the one I described above. If you are in my area,
Alpharetta or Sandy Springs, Ga, and you are in the market
to buy or sell a home contact me to ensure that you are prvided
all of the necessary information so you can make an informed
decision about your real estate situation. Visit my Alpharetta
and Sandy Springs Real Estate website to learn more about
the buying and selling process.
Ryan Ward of Classic Atlanta Properties is a
member of the national, state and local REALTOR associations,
and resident of Alpharetta, Georgia who specializes in listing
and selling real estate in Sandy Springs, Roswell and Alpharetta.
For more information about Ryan Ward and Classic Atlanta Properties
visit his Alpharetta Real Estate website or call 404-630-3187.
|