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REAL ESTATE
MONTANA LIFESTYLES
What Is Your Home Worth? By BLANCHE EVANS
AUGUST 13, 2014 | 37
When you are interviewing Realtors to market your home, you’ll be introduced right away to a price- less document – the comparative market analysis, CMA. This is one of the areas in which the real estate industry really earns its keep – by showing you in black and white what your competition is. But like a sword, it is a tool that can cut both ways. You and your agent will use the CMA, among other tools, to determine where your home will stand in comparison to others that are on the market, and those that have recently sold to de- termine the highest possible asking price. Your buyer will use it to find ways to reduce his or her offer.
CMAs are about facts that can be qualified and quantified. The CMA is typically designed to give quick capsules of information such as number of bedrooms and baths, approximate square footage, size of major rooms, amenities such as fireplaces and pools, age of the home, property taxes, listing agent contact infor- mation and more.
CMAs can include homes that are currently for sale and those that have recently sold. They can go back in time as long ago as a year or a month or week ago. CMAs can cover areas as narrow as one or two streets sur- rounding your home, or as broad as an entire subdivi- sion or surrounding areas, depending on the scarcity of home choices.
What are not included in the CMA are those fac- tors that affect perception, and that is the key differ- ence between why one home with identical features will ultimately command a higher price than its twin. Perception alters reality, and this is a crucial consider- ation in understanding the buying and selling process and the value of the CMA. Much of a home’s value will ultimately be determined by the emotional impact it has on buyers. These emotions are based on subjective elements such as drive-up appeal, interior decor, col- ors and views from the windows, light, darkness, room flow and hundreds of other factors.
At the end of each home’s information on the CMA report there will be a brief statement provided by the listing agent. This statement is usually a combination of fact and subjective opinion, and will generally cover selling restrictions or selling points. It could be any- thing from “seller’s agent must be present at all show-
ings” to “kitchen and master bath completely remod- eled in 1997” to “Charming! Must see!” Keep in mind that Realtors will be responsible for promoting and de- scribing your home. They all have an individual style of marketing and that some will be better at writing CMA reports than others. The key is to focus on the actual facts and anticipating the positive impact of the subjec- tive.
For privacy reasons the CMA that is offered for pub- lic consumption does not list every piece of informa- tion that has been obtained by the seller’s agent. It will give the what, when, where, but it won’t give the who, the seller’s identity, and the why – why the home is be- ing put up for sale. The reasons are two-fold, to protect the seller’s privacy and to keep from inadvertently giv- ing the buyer an advantage in a distress situation.
The CMA is clearly a selling tool, but like any tool, it
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doesn’t work very well by itself. It takes a skilled person to be able to use it. For this reason, the CMA will always need to be interpreted by a professional or with com- plete objectivity by the seller or buyer. It also has inter- preted the past performance of the real estate market by assessing the value of similar homes that have sold.
Remember that the CMA is also a buying tool; it is taken just as seriously by the buyer and his or her agent. As you and your agent are going to use the CMA to ask the highest possible price for your home, the buyer is going to use it to find reasons to either choose or elimi- nate your home, and to arrive at the lowest price possi- ble. These guidelines are just that. The current market will determine the eventual sale price of a home based on what a buyer is willing to pay, and what the seller will agree to accept, all subjective factors considered.
Submitted by the NMAR PR Committee
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