Here’s how you can do CMAs like an experienced real estate professional.
By now, you probably know that online home valuations are not always super accurate. Even with the unique information we have access to as agents, you can’t rely on these tools to price your clients’ homes. If you suggest a bad price, it could tank their transaction and cost you your commission. That’s why most real estate experts do a comparative market analysis (CMA) to find what a home will actually sell for. If you’re new to the business or need a refresher on how to do these the right way, don’t worry. Here are a few steps you can take to calculate an accurate CMA like a pro:
1. Get the facts. One of the advantages CMAs have over online valuations is that you can factor in the unique features of a property. Get to know everything about the home, from the square footage, the age, the number of beds and baths, and anything else that might affect its value. You might even suggest to your client to do a pre-home inspection so that you can get as much information as possible.
“Location, timing, and quality all matter.”
2. Find good comps. Once you understand a property inside and out, it’s time to find similar properties and see what they sold for. Location is key; the closer a comp is to your client’s property, the better. Also, don’t forget that a comp becomes less valuable the older it is. Do your best to find as many good comps as possible. This will make it easier to do adjustments in the next step.
3. Make adjustments. No matter how many comps you find, there won’t be one that’s a 100% replica of your client’s home. Make adjustments to your comps’ prices based on the unique facts you found in step one. For example, if your home is very similar to a comp but has a finished basement, you might be able to raise the price slightly. This is also the time to consider market factors. If you find a perfect comp, but it sold when interest rates were two points higher, you’ll need to take that into account.
It might take some practice, but if you follow these steps, you’ll be able to do CMAs with the best of us. As always, don’t hesitate to call or email me with any questions. I look forward to hearing from you!
