CMA Steps: Evaluating the Potential Selling Price of Your Home

1.   Review Public Records to get relevant property information required for analysis.  Information such as square footage, taxes, zoning etc. is compiled as the preliminary step.

2.  Initial Property walk-thru with client.  Here I take notes regarding the property features and defects to be used in comparing to other properties. We may also begin discussing the staging process and simple changes that could make a huge difference in the sale of the home as well as the owners current staging/repair/upgrade plans.

3.  Identify comparables.  Here I gather a list of on-market and sold properties that become candidate comparables.  Ideally these homes will be relatively close in proximity to the home we are evaluating and be of similar size and style.

4.  Make adjustments to the comparable properties. This is called the appraisal method.  This is particularly necessary in the Seattle market where there are mostly older homes, very  little conformity, and varying degree of quality.  Monetary adjustments are assigned to the comparable properties to account for the differences between them and the subject property.

5. Analyze the results.  As comparables are adjusted, we arrive at an adjusted value for each comparable as related to the subject property.  If enough properties are selected we should see the adjusted values hover around a price range.  Typically there will be some outliers that require further analysis.  Often, clues such as time on market can indicate that the selling price of these properties was above or below market.  Additionally, factors such as market timing, and inflation need to be considered.

6.  Sit down with you, the property owner, and present the CMA, identifying the comparables chosen, the adjustments made and why. At this point we have determined a pricing range that I believe your home can be marketed for.  My goal is to arrive at an offering price that is within 1.5% of the final selling price.

I have found this method to be highly reliable in marketing single family homes in Seattle. My market times have typically been at or below the average.  This means that my listings sell without sellers having to wait extended periods of time for results. There is nothing worse than having a home sit on the market for weeks on end with no offers.   If you are interested in selling, I will be happy to discuss my professional marketing services with you.

 **A few words of caution about refinancing and appraisals**

 If you have recently refinanced your home, you probably have an appraisal report ordered by your lender which you paid for. (Often times you must request this report or you won't get a copy, check the fine print). On it you should see comparable properties and adjustments as I described above.  Unfortunately, many lenders are too eager to issue loans and often over-value properties so that the loan can be approved.  This becomes a significant problem where the loan to value or 'LTV' is extremely high.  If you refinance your home with a 90% LTV and the appraisal is above market, you may have to write a check at the closing table!   It costs money to sell a home. In Washington figure around 8.5% of the selling price to cover commissions, excise tax and closing costs.  A 90% LTV does not leave much room for error if you subsequently decide to sell your home!