When you go to buy or sell a home the biggest question will be “What is it worth”. Buyers want to ensure they don’t pay too much and Sellers want to get the highest price possible. It’s the job of your Realtor to ensure this happens. This is primarily done by constructing a CMA or Comparable Market Analysis.
The CMA is a study that takes recent sales in a given area and timeframe and compares them to the subject property. The subject property being the home that the Seller is trying to sell or the Buyer wishes to buy. While the CMA has guidelines and standards, it is by no means a template system that a Realtor simply plugs numbers into. It is part science and part art.
Some of the key factors I use in a CMA include:
• Close of Escrow Date. Only sales that have happened within 6 months of constructing the CMA should be considered. However, there are times when I am forced to go back further due to a lack of comparable sales in the target area.
• Distance from the subject home. For a home to be a comparable it must be within a 1 mile radius of the subject property and considered to be in the same neighborhood. Again, this rule is sometimes stretched beyond the 1 mile limit due to lack of comparable sales.
• Type of residence, Single family or Multi Unit. A condo can not be used as a comparable if the subject home is a Single Family Residence even if it is the same size and has the same number of bedrooms and bathrooms.
• Square footage of the home. This will translate to a price per square ft. Larger homes will generally have a lower price per square ft. than a smaller home in the same neighborhood. This is due to an areas price ceiling. Meaning that buyers will only pay so much to live in a given area no matter how large the home is.
• Number of bedrooms, baths and garage spaces. Bedrooms and baths have a value of their own. So two homes of the same size will have a different value if one has more bedrooms or baths. The value of these extra rooms will vary depending on the neighborhood.
• Age of the home. A home that is built in 1950 may be worth less than a home built in 2010 even if they are comparable in every other way.
(This is not always the case however)
• What amenities are in the home? A/C, central heating, pool, spa and appliances will all factor in to the homes value.
• Condition. Is the home updated? Items such as Landscaping, roof condition, cabinets, counters, floors, windows, molding and recessed lighting are all factors that will adjust a homes value up or down when compared to others. Again, there is no set amount for these features. It will vary from neighborhood to neighborhood.
All these factors go into determining the value of a home when using a CMA. Homes are chosen as a comparable then dollar amounts are added and subtracted depending on what the home does or doesn’t have. When done right, it is a very comprehensive way to determine the true value of a home.
I hope this information is of value to you. Your questions and comments are welcome. Send them to pleasantontrivalleyhomes.com.
Best regards,
Eric Soderlund
Realtor, GRI, SRES
Steven Anthony Realty
www.pleasantontrivalleyhomes.com
Bay Area Real Estate 