When looking for the right agent to sell your property, one very important aspect of gauging his or her market knowledge and expertise can be found in how the agent approaches the Comparable Market Analysis (CMA) for your property.
Simply put, the CMA is intended to be an apples to apples comparison. CMAs prepared for sellers typically provide details on three or more nearby, similar properties. The CMA data is crucial, in fact the number one component, for determining the market value of your property.
Here are things to look for in the properties that the agent chooses as the comparables for your property. And don’t be shy about asking the agent for details on each. A top-notch seller’s agent will have conducted in-depth research in selecting the comparables to present in the CMA.
First some basic CMA terminology (click here for basic CMA and Listing terminology).
- Subject Property: The property you are evaluating, either as the seller or the buyer.
- Comparable Property: The properties that are being used as the best-fit comparisons to the subject property.
- Property Status: If the property is still on the market, has a contract, or is sold.
Basic Features Similar or Identical
- When the property was built should be about the same time as yours (built between 1999 and 2003 for example)
- Overall square footage should be the same or very close to your property; be sure to check the under air square footage and total square footage
- The construction type should match yours (for example, concrete block with stucco)
- The roofing is similar in type and age (concrete tile about 5 years old, for example)
- Space utilization overall should similar to yours: the number of bedrooms and bathrooms, garage spaces, floor plan design (split bedroom, great room), number of stories, unit floor (condos), a family room (or not), formal dining (or not), lanai/patio…
- For waterfront properties, it’s also important to assure features such as seawall, boat dock, and boat lift are similar in quality, age, and size.
Overall Condition of the Property
Ask about the how well maintained the comparable properties are. If yours is meticulously maintained, a comparable that “needs TLC’ or that has roof damage is not a valid comparison.
Also important are any upgrades your property, or the comparables, have undergone. If your kitchen is the original and is 15 years old, but a comparable property has an upgraded kitchen with granite countertips and new appliances, an adjustment needs to be made or a different comparable used.
Location, Lot, and View
- Lot size and type: in SouthWest Florida, the majority of lots are a quarter of an acre (.250). Corner lots, oversize lots, “triple lots,” and cul-de-sac lots typically command higher prices.
- The comparable properties are in your geographic area, typically within a mile radius or so.
- View and type of view are similar (waterfront, golf course, wooded area, Gulf of Mexico, bay, basin, lake, pond, parking lot, obstructions, etc.).
- If yours is waterfront, pay close attention to the waterfront types of the comparables. Because there are so much variety in the waterfront properties in SouthWest Florida, especially in the canal systems, this is key. For example, a gulf access home that is an hour from the Gulf, even if similar in construction and other factors, is not going to command as much as a gulf access home that is 20 minutes from the Gulf. Likewise, a freshwater lot with a lake view is more prized than one on a standard freshwater canal. Intersecting canal views are valued higher, as are properties on wider canals (120-200′). Likewise, check out the details on comparables for the Caloosahatchee River views and Gulf of Mexico beach front views (frontage, direction, obstructions).
Adjustments Are Sometimes Necessary
In some cases, it may not be possible to find nearby properties that carry all of the same features. For example, if the nearby properties are identical in square footage, layout, lot size, age and condition…. but yours has a swimming pool and the others do not, an adjustment can be made to the comparable properties. The adjustment is added (or subtracted) from the comparable. So if the comparable does not have a pool, and yours is brand new, the agent would adjust the comparable value by adding the value of the pool, say $40,000, to bring the comparable up to par with your property (called the subject property).
Sale Status and Dates
The comparable properties should be ones that have recently sold, within the last six months or ideally the last three months. If sold data is not avaiable (no similar properties have sold in the neighborhood), then next best is those that have recently gone pending.
Also pay close attention to the DOM, the number of Days On Market. This is calculated from the original list date to the date of closing (when title transfers to the new owner). This is an important factor: if the property sold quickly, you know it was priced right. If the property was on the market for 180 days or more (perhaps with several price decreases along the way), the pricing strategy that seller used is circumspect and provides evidence it was priced too high. (Other factors may have delayed the sale, but more often than not, DOM is an indicator of price point.)
Related Posts: Terminology, CMA Analysis, Listing Questions, E-savvy Agents