Smart Agents put Analysis back in Comparables Market Analysis

By
Real Estate Agent with Keller Williams Realty 0575737

PaperworkIt has always bothered me in the real estate world that with the mountains and mountains of paperwork to tend to, a little more effort on the Comparables Market Analysis (CMA) is in order. Entirely too many agents throw raw data at a customer on a handful of Actives and Solds and expect the client to figure it out. Some don't even explain what it is used for.

What needs to occur to be a tad more helpful is to show similar properties in square footage, geographic area, pool or no pool, year built, and then determine a "range" of prices that a property could be offered up for sale.

Next, an explanation of the idea that as you raise your asking price less of the buyers will view the property. For example at market value 60% of the buyers will view the property. At 10% above market only 30% of buyers will view the property.

Some basic understanding of what a CMA is for and interpreting it with just a little more analysis would go a long way toward being much more helpful in setting pricing strategy.

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Rainmaker
996,775
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate
Hi Gary:  I think the best thing to do is to vary the presentation of your comparables according to each seller's needs and way of understanding your data.  Some sellers do well with lots of analysis, print-outs, averaging and so forth.  Others benefit more from simple showing the actives, pendings and solds on a sheet by sheet basis, and lets the sellers see for themselves what pricing makes the most sense in view of the comparables you have shown them.  Thanks for sharing... and how did you manage to get a picture of my desk ?
Nov 23, 2007 12:36 AM #1
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Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Gary:  I think this is the first time I've run across your blog.  I found you among the 719 members on the site right now.  I'm subscribing to your blog!

Mike in Tucson

Nov 23, 2007 12:55 AM #2
Rainer
86,000
Carol Williams
Nationwide: Self-employed Real Estate Copywriter, Blogger, Photographer and Real Estate Mentor - Wenatchee, WA
Wenatchee Real Estate
Gary,  The other part of the "analysis" is knowing the market trends and incorporating recommendations with the raw data... which many agents are clueless about.  They do look only at raw data because that's easy to pull off the computer, but that is only one part of the process.
Nov 23, 2007 01:08 AM #3
Rainmaker
1,515,993
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Gary - Good reminder that a CMA should always show a range of the potential list price rather than a set figure. Our team also indicates this range when we fill out a net sheet.

Graphs work great for showing sellers how overpricing their home relative to the market will affect the chances of it selling. I believe the Camp 4:4:3 materials have an illustration of this.

Nov 23, 2007 01:16 AM #4
Anonymous
Anonymous
Gary, this is some great advice! I know of a few agents who don't even take the CMA out with them on appointments. They say the seller will only get confused. I'm thinking they want to list the house at the highest price possible and don't want the seller to know the truth. I guess having an overpriced listing looks good to the agent?
Nov 23, 2007 05:05 AM #5
Anonymous
Anonymous
Gary, Great advice.  An agent should always do their homework on the CMA before presenting it to a potential seller.  Thanks for sharing.
Nov 23, 2007 05:12 AM #6
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Karen: I agree that too much information for some is overwhelming. We have to guide them to its underlying meaning.

Mike: Thanks.

Carol: So true about market trends, like whether it is a buyers or sellers market or if the market is still in decline and you are chasing prices down.

John: The overpricing effect on who ends up seeing your house cannot be emphasized enough. In the Camp 4:4:3 materials they illustrate it with a triangle with less buyers as you go higher in price over market.

Linda: I know some agents wing it. It's amazing. Maybe they want a listing at ANY price.

Kay: CMAs are just a tool to help sell the house if used properly.

Nov 23, 2007 08:52 AM #7
Rainmaker
155,810
Nancy Moeller
Seven Gables Real Estate - Anaheim Hills, CA
Your blog is great Gary. We like to show our sellers first hand the competition so they know what their buyers are seeing. We believe this adds credibility to the numbers. Paper does not paint the picture.
Nov 23, 2007 09:53 AM #8
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth
Nancy: It's amazing you used the word "Competition." That's exactly what I refer my list of Actives as. Some are poor competition with overpriced and poor condition homes while others are attractively priced and in move-in ready shape and are stiff competition. Excellent point.
Nov 23, 2007 09:56 AM #9
Rainer
208,738
Marc Grossman
Marc It Sold! - Longwood, FL
GRI, Greater Orlando Real Estate Broker
I haven't utilized a CMA for many years.  Like I tell my clients I can skew those numbers easily - whether they be up or down.  I do go over the actives, etc.  I do, as Nancy stated above, show them the competition.  And, I do speak to them at length what all this means to them and where they need to be to be successful in having their house not only shown, but sold!
Nov 23, 2007 10:27 AM #10
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

BRAVO Gary...Whatever we do for our customers and clients we should do with thoroughness.  The CMA is only a piece of paper with numbers on it.  The same with the listings.  It's how we help them understand and INTERPRET the information is what is important.  That is why REALLY KNOWING your market is an essential tool.

Kathleen

Nov 23, 2007 10:40 AM #11
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Marc: My hat is off to you in not using a CMA. You must be the real local expert and a trusted advisor to your area clients. It's interesting for those newer in the business how the CMA tool is viewed as almost mandatory on listing appointments. I found it very useful but that is the part of me that likes to pay attention to details. It's my information junkie side.

Kathleen: Excellent point that we are the interpreters of the raw information.

Nov 23, 2007 10:58 AM #12
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