Set the price

E - Asking Price: What is the best source for an asking price?

A CMA is the best pricing source 

A CMA (Comparative Marketing Analysis) is the term applied to the process real estate agents use to provide their opinion, in a written report, as to the value of a property. The agent usually accompanies this no-obligation, evaluation estimate with a suggested listing price. A CMA can provide the best source for the asking price.

Why a CMA is valid:

A CMA provides a comparison in value between your home and other homes. These comparisons, or “comps” involve:

          Homes that are like yours

This includes similarities in as many ways as possible, including style, age and size. If a lot of homes make a good match, then less obvious characteristics are considered, such as lot size, upgrades and amenities. Using similarities makes for valid apple-to-apple comparisons.   

          Homes that are in close proximity to yours

The location of a home has a tremendous influence on its value. Therefore, for a legitimate comparison, homes that are physically close to yours are used. This is almost always within a few blocks although it could be one street or it could encompass a few square miles of rather homogeneous houses. The exception to this is when a home is somewhat unique (log home, contemporary, etc.) and if similar homes cannot readily be found in close proximity.

          Homes that recently sold or are currently on the market

It is imperative that comparisons are made with houses that have timely market activity. The prices of houses that have recently sold give us an indication as to the direction upcoming selling prices can be expected.

When a CMA is presented, homes "active" (currently for sale) are used for pricing comparisons and consideration. However, considerably less weight is given to the asking prices of houses that have not sold.   

Why you should get a CMA:

          In the first place, it’s free

Just about every real estate agent will do this for no cost, making it hard for other agents to charge for this service. 

          Agents are happy to do a free CMA for owners

This includes both owners intending to list their home and those that plan to sell on their own. That’s because the agents know that the majority of owners give up too quickly when attempting to sell on their own. The agent the owner lists with is almost always one of the agents who gave them a free CMA.

          A CMA is an interview opportunity

If you decide to list your home, you will have this opportunity to see if the agent is a person you feel you could work with or if this is an individual who displays phony sincerity, lacks experience or exhibits an uncomfortable degree of pushiness. A CMA certainly provides an excellent time to find this out. 

During an agent's presentation you’ll hear recommendations on making your home more marketable and how the local housing market is performing. A CMA provides an obvious forum to find out what is needed to complete a sales transaction.

How a CMA stacks up to an appraisal:

In most instances, local, experienced agents can provide a more realistic opinion of value (in terms of what someone will pay for a property) than will be supplied by a licensed appraiser. 

          Appraisers typically do not specialize in an area

Appraisers are less familiar with a neighborhood’s value or the factors and trends that affect local pricing than are real estate agents who concentrate in a particular area. Rarely have the appraisers actually been in the comparison houses, making them much less attuned to the subtle differences between properties that account for why buyers pay thousands of dollars more (or less) for one property versus another.

          Appraisers offer advantages

There are good arguments for the validity of an appraiser’s opinion over a real estate agent’s estimate. The appraiser is much more objective. He or she is not swayed by having the potential for a commission. The appraiser is not trying to impress an owner by providing an inflated value, as agents might do to entice homeowners into listing with them.

In addition, appraisers do not use unsold houses (those still active on the market) as comps when arriving at a property's value. The recently sold homes used as comps by an appraiser are almost always restricted to those that closed within the last six months, and preferably sooner.