Home Valuation - - C.M.A.
Welcome to the C.M.A. - - “Home Valuation” - - “Certified Market Analysis”
There are two kinds of Home Valuations:
The Automated one that’s generated from Realtor’s software with a few points & clicks.
The Real One.
Surprise! The automatically generated CMA from the Realtor’s service-website is a GREAT marketing tool used to get new clients!
You’ve seen it on Facebook… “Call us for a Free Home Valuation!”. I’ll send you a Free CMA, just click below.
< Click here for your FREE Certified Market Assessment >
When you’re ready to get serious, a real CMA is much more involved. You NEED this. It takes a lot of work to determine where your home sits in the marketplace and how it’s valued. It’s worth it, because this is how your Realtor covers his/her fees. I’m straight-forward about the effort and resources it takes to provide this service to you, and I’m sorry, but I simply cannot do it unless you’re a client. Also, I can’t do a thorough CMA until I’ve visited your home. 10 homes look very similar on paper… very different when you walk inside. Knowing what’s out there with a generic CMA package is a convenient way to start.
It’s common to leave between 15,000 and 60,000 sitting on the table in too many real estate transactions, and few people understand why. Unfortunately, Nobody finds out until the money is gone. It’s common to over-pay by 15,000 and think you’re getting a great deal because you talked the seller down, but maybe you’re still paying too much? Is 15,000 worth saving? On the seller’s side, you’re going to get low-ball offers frequently, so you have to be confident in your valuation. On the buyer’s side, you have to collect evidence to support the seller’s valuation. Buying or selling, a good CMA is the tool you need to come out on top. Put your Realtor to work!
You find 10 properties that have sold within the last 120 days within a 0.25 km radius of you. No wait… let’s make it 1 km because there haven’t been 10 sales that close to you lately, and last year’s market upheaval brought some dramatic changes. We can’t change “time”, so we’ll have to change “distance”
- This means some properties are now considerably closer to a school and some considerably closer to walking trails
- Your neighbourhood is a little older, and most of the homes were built by 2 contractors, so many appear very similar from outside.
- The streets are long and winding with significant grades
EXAMPLE: This is a summary
You won’t find it on the Auto-Generated CMA
Your basic property description is:
Built in 1994, 2600 sq.ft., 0.35 acres, 4 bdrm, detached, 3 balcony, master bdrm, walk-in, ensuite, 3 bath, older kitchen, 2.5 double-garage, newer mechanical, cul-de-sac, extensively landscaped to provide for privacy, backs onto Crown Land.
You’ve added fresh paint, and although it’s all in great shape, the bathrooms & kitchen look just “a little” dated.
Many homes may look virtually identical to yours from the outside, but 22 years is a long time for a home to go without regular maintenance. Many of the homes in your neighbourhood were tenanted and the economy hasn’t been strong enough to provide for great wages. There’s been high turnover.
Other homes have been attended to by fastidious retired-types. Others have been extensively renovated and updated. Bedrooms & features don’t make them equal.
Homes in an adjacent neighbourhood were built upon fill, so concrete and foundations haven’t fared as well as your property, which has been built upon bedrock.
You’ve touched up the walls and added fresh, professional paint. The real value goes beyond a face-lift, of course.
* We’ll use current variables *
You’re vaguely in the 550K to 700K price range, but new buyers being forced out by stress-tests has relieved pressure on the lower segment to be competitive. Prices have fallen on properties over 800K, (although value has stayed the same). This has pushed 700K buyers into a higher price-category, removing those buyers from your market and putting more pressure on sellers in the 700K range to accommodate buyers who would formerly be looking for a home in the 600K range. The slow market has them hoping they’ll get more house for less money.
Anyway, you can always expect low-ball offers, but in this climate, you should get ready to expect more. You’ll need to respond intelligently. The slickest salespeople out there can sound pretty convincing, even if they don’t have a single stroke of evidence.
How much will it take to bring your home up to the same standard as the other “top” homes in the comparables list? If you don’t want to lower your listing price, adjust your expectations. Instead of an Achilles Heel, make it a bargaining tool. Kitchens are expensive… bathrooms, too. Just how out of “style” do you think you are? Never try to guess what your client is thinking… they all think differently. That’s why you want to keep everything neutral and widely appealing. If your kitchen is a little closed off, maybe your buyer has kids and prefers the privacy?
Your paint is fresh and clean. It’s rather boring to you, but the buyer will add highlights to suit their own tastes if they want to.
When looking at adjustments, you’re either working your way down from a top price, or you’re working your way up to justify your home against the top prices. Your buyers will be working their way down; probably way down. In the market conditions we’ve accepted for this example, they might be inclined to compare your home with one that’s in a different price-category, altogether. That’s why your Realtor has to know the details.
DIRECT COMPARABLE PROPERTIES
- We’re mostly interested in features here. Break it down:
Your home has 3 decks… if you want to price on the high side of the valuation, (as usual), this means that a comparable has 3.
- Your concrete is in perfect shape… a comparable will either be
a) Perfect, b) Less Than Perfect, c) Way Less
- Your kitchen & bathrooms? Well, they’re probably a 2 out of 3.
Since you want your property to be priced at the top end of the spectrum, you’re probably looking at comparables #8, #9 and #10... thus, “7 out of 10”. You’ll have to consider PART_F and be realistic.
- Windows, doors, hardware: you’re at the top of the game.
- Paint & Flooring: top shelf.
- Exterior: immaculate.
- Mechanics: Relatively new and energy efficient.
- Number of Bedrooms & Bathrooms: 4/3
- Square Footage & Acreage/Usable: you’re top 2
PRICE COMPARISON & AVAILABILITY:
SOLD Properties - 120 days - Lowest to highest:
1 - $615,000 - 111 Antler Road - Steep drive, single deck, view is of the road, 2500 sq.ft., low-ceilings are dated. Sellers were divorcing and were willing to let this go for a very low price. 4 bdrm, 3 bath, a terrific deal for a cash buyer.
2 - $618,000 - 222 Bradford Ave - Very dated, 3 bdrm. Identical design from the outside. 1 deck. Steep driveway. Not very well-maintained over the years, but ready to move in.
3 - $620,000 - 333 Celtic Blvd - 3 bdrm, 1 deck, small lot, very dated. A nice home and very similar to yours, but not in the same league. Short driveway.
4 - $625,000 - 444 Donovan Cres - small main level, small lot, 2 small decks, old windows. Sold below assessed value due to the deteriorating health of the owners. Lots of work needed, but the second BEST deal in the list for a handi-man with experience.
5 - $629,000 - 555 Esquire Way - 3 bdrm, smaller lot, no privacy. 2 decks. One of many homes with the same appearance from outside.
6 - $645,000 - 666 Fanfare Road - Lovely home with 3 levels, 3 decks, beautiful renovation with smaller main level. Lot is small with no privacy from the neighbours and a steep driveway.
7 - $649,000 - 777 Gallant Street - Smaller main level and only 2100 sq.ft., but a very nice property and freshly renovated. 2 nice decks. Smaller driveway but also on a cul-de-sac. Very nice.
8 - $668,000 - 888 Heisenberg Blvd - slightly smaller lot, very private, pool & great landscaping, steeper driveway but practical. 3 decks, great renos and details. Very nice.
9 - $670,000 - 999 Ingrid Way - 0.17 acres is smaller, but 5 bdrm and 3 baths. Very nice, multiple decks, creative design, newer home that shows beautifully.
10 - $680,000 - 1999 Jack Cres - .3 acre, 4 bdrm, 3 bath, multiple decks, newer home, privacy, cul-de-sac, single family, 2-storey. Very nice.
11 - $715,000 - 2999 Kapper Road - NEW home.
Your landscaping is beautiful, and your location on the cul-de-sac and crown land is second to none. But there are other comparables with top-end landscaping, too… maybe a swimming pool and an enticing back yard setup. They’re closer to the school, you’re closer to the trails.
Your garage is bigger than the average, and your driveway is flat, but being at the bottom of the cul-de-sac means you don’t really have any additional parking on the road. Other comparables have steeper driveways.
Layout: this is pretty intangible. Open concepts are in-style, but folks with family & kids don’t always like it to be “too” open. Makes it tougher for folks who like hosting a lot of guests, and it can make heating & cooling more expensive. It’s also harder for people to imagine what their furniture will look like in your home, unless they’re moving from another open-concept space. It’s striking & beautiful at first sight, but can lose its appeal.
YOUR LISTING PRICE
When you’re preparing a CMA, your Realtor will have to do this all over again for the properties that are currently available for sale.
It’s all about what’s available, and if the market has changed, then yesterday’s prices don’t mean very much today. 120 days shouldn’t change anything too dramatically, but in this example we’ll say that spring is just around the corner, so we have to anticipate what the market is going to do before we set our price.
Common elements of lower-priced properties:
- 3 bedroom
- smaller lots
- no privacy
- single deck
- 20+ foot driveways/steep driveways/poor surface
- dated interiors
Common elements of higher-priced properties:
- 4 to 5 bedroom
- 3 bath
- private yards
- fully landscaped
- multiple decks
- 50+ foot driveways
- updated/renovated interior
The Auto Generated CMA from the Realtor Services Website
It’s generic. It’s certainly good to have this, so please think of it as a starting point. It’s great to have a document listing all your competition in a single package, however, using this to base your Valuation without putting more work into a better CMA means you could be among the seller’s leaving money on table. If you want to get a good price for your home, you have to know its value and be ready to defend its value. When it’s time to negotiate, this is your golden ticket. If a buyer’s Realtor wants to tell you that your home is worth less than you’re asking, (as they often do), they’ll have to prove it. It’s the fairest & fastest way to a successful negotiation and it produces the best results.
It doesn’t have to be this complicated. You can throw your home out there and see how much you get, but the stats say that you’ll usually end up getting less money this way. This is a job for your Realtor! Put him or her to work and expect more!