What is your home worth? How do you know?
Friday, July 11th, 2014
Issue 28, Volume 18.
It’s amazing how confident some homeowners are when quoting a value they got on line from Zillow or some other mega-website that does everything at the touch of a button. If only life were that easy.
Everyone has been preached to for years to interview at least three realtors before making a decision. Sure, today many top agents have the latest portable electronic gadgetry that can wow the heck out of you and impress you with a wonderful marketing plan that is sure to bring prospective buyers to your home…but is that enough? What good are 100 buyers touring your home in a weekend if it’s priced below fair market value?
When interviewing an agent, pay more attention to what the agent says and not what he shows. Those gadgets of real estate wizardry can all be purchased for a price. Local market knowledge and common sense – these are the attributes that truly make the difference. Let me emphasize how critical it is during the interview process to pay attention to what is said.
COMPARATIVE MARKET ANALYSIS (CMA)
Regardless of how it’s delivered, the most common method of determining the value of a home, is by preparing a Comparative Market Analysis, aka CMA. This is nothing more than a detailed report that looks at the recent past and present market conditions of similar properties to determine a value. Again, be aware that some agents purchase some pretty extraordinary software packages that polish all the bells and fine tune the whistles – the question remains… "What does the agent really know?"
Many agents will use comparisons of homes that are not at all similar. Imagine living in a single story ranch home and having an agent justify a price by comparing your home to a two-story colonial. Believe it or not, it happens all the time.
Every good CMA will include similar homes that have recently sold – ideally in the last three months but never more than a year. They will also show you pending and active listings. A thorough CMA will also include similar homes that have been on the market but have been taken off either as an expired listing or perhaps it was cancelled by the home owner. Each of these categories of homes tells a story about the current market conditions. Let your prospective agent explain the story to determine if they really know what they are talking about.
The basic data is relevant to all homes for sale – or sold. It’s the starting point of assessing property value in any market. Some of the basics that can sway the value of a home for sale include:
Garage – Number of stalls? Attached or Detached? Direct Access?
Year Home was built
Lot size and condition
US vs. THEM
Skills the best realtors bring to the table will be interpreting the data and being able to determine the value of each adjustment in order to determine what your home is actually worth on the date the CMA is prepared.
Skilled realtorswill know what value a fourth bedroom has over a third bedroom home. Is a three-car tandem garage worth the same as a three-car side-by-side garage? If not, what adjustments should be made, in your neighborhood? If the kitchen has had a major remodel with new cabinets, granite counter tops and high end stainless steel appliances will that add value to the home or just attract more buyers? Is a model match home worth the same as yours if it’s at the end of a cul-de-sac and yours backs to a major thoroughfare?
I can’t begin to emphasize how important it is to insist on having your prospective real estate agent explain every nuance of the CMA he’s prepared and evaluate how much he really knows and how much he relies on software.
IS YOUR LISTING ‘FOR SALE’?
Unfortunately, in today’s competitive market many agents believe they can buy your listing by suggesting a top dollar list price to get the listing, thinking they will later come back for a price reduction. They’ll do this because either they just don’t know any better or because they want to appease the home seller who believes their home is better than the neighbors who just sold.
Other agents will take a listing at any price, even if it is way overpriced. They believe that their marketing machine will generate phone calls and internet leads that will become new business for them, all at your expense – either way you lose.
FIGURES NEVER LIE…LIARS ALWAYS FIGURE
One of my earliest lessons in business was that figures never lie but liars always figure. Take the time to carefully look over all of the CMA’s you’ve been presented, side-by-side; never feel rushed or pressured in a listing presentation. Take your time and understand the differences of what each agent is representing. Call them, question them and get to the bottom. Compare apples to apples and bring everything together before making a mistake that could potentially cost you thousands of dollars and upset your timeline by choosing the wrong agent.
Call us today and get the information you need to make the right decision. The information is free, call now! (951) 296-8887.
Questions regarding available inventory and/or other real estate matters please contact me, Mike@GoTakeAction.com. Mike Mason, Broker/Owner of MASON Real Estate Cal. BRE: 01483044, Board of Director of your Southwest Riverside County Association of Realtors® (SRCAR), Traveling State Director, California Association of Realtors® (C.A.R.).
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