CMA

When I bring up the acronym CMA, I’m sure all you country music fans are having your interest piqued. Sorry to disappoint but I have never watched the (CMA’s) Country Music Awards. I do not hate country music but it’s just not my thing. Some of it is that twangy sound. And I just don’t find the storytelling that compelling. Many of my friends are pushing me to go to a concert and promise I’ll be swayed. Look, lots of people love eggplant. More power to them. Too me the texture is soft and taste is YECH! Now which genre do you think this little ditty I just wrote is falls under….

“I drive my pickup truck and when I’m down it picks me up. Up up up. And when my girlfriend left me, my pickup truck picked me up and kept me truckin down that long, lonely road. So, time to saddle dem boots up, down a swig of whiskey and rev up my pickup truck. I just love my pickup truck as it keeps me up up up.” 🎶🎶

See, you know it’s a country song. Pickup trucks, breakups, boots, whiskey, women, and love.  But I’m not here to get in a battle about Country versus Rock. Plus I don’t have a cowboy hat or rhinestone jackets (come to think I do like the Rhinestone Cowboy by Glenn Cowboy).

No, the CMA I’m talking about is the comparative market analysis.  Sellers of property want an appraisal and so do buyers when purchasing a home. The truth is that only certified appraisers can give an appraisal. Realtors prepare a CMA and can do a Brokers opinion of the price.

A Seller calls up and during the listing appointment asks, “So, what do ya think about the price?”  Well, there is a lot that goes into it.

First, a good Realtor works within the framework of a year giving more weight to the last 3-6 months. However, activity that is happening at street level and isn’t recorded yet must be kept in mind. An appraiser is always looking in the past. If the sun exploded, they couldn’t report it to you until the light came to earth (8 minutes later) and blew us all to smithereens. A real estate agent who has their ear to ground can make those extra +/- adjustments.  Often seasonality comes into play as well. A zero-lot line home with no sales in the summertime or one low one does not have as much weight to me because it’s not in the right market where buyers are plentiful.

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I typically throw the most expensive and least expensive sale out as those can be outliers. While I might use those when negotiating either way, they are not always truly indicative of the market.

Other factors also come into play. Upgrades that a home has versus drawbacks. Views, bedrooms, materials, garage spaces, pools, road noise, condo floor, pet restriction, yard space, and exposure are all good examples. You also must keep in mind if the home is too expensive for the neighborhood. In a non-family neighborhood, a 2-story with primary bedroom upstairs might get much less money than a 1-story home even though the 2-story has more square footage. The type of market you are in also plays a role. In an extreme selling market, the ugliest of fixer upper homes sells well. In a bad market, the percentage and spread drops considerably.

When giving a price, I go over the comparables and give a price range with 3 numbers. It’s up to the Seller to choose #1, #2, or #3 on the menu of prices.  The first price in the range is the low price, which is if someone really needs to get it moved. The second is the probable marketing price. Third is for the person who says, “I don’t need to sell” and really means it. The price someone should price a home at depends on motivation. If it’s off-season and the house is empty with a possible long time to carry, it might make sense to price at a lower number. If a home is put on now and the Seller has all the time in the world, then it might be ok to price high. Homes with all the right ingredients can be more aggressive on average. Homes that are a problem child need to be careful of being overly aggressive as you don’t want to miss a buyer in the probable prices range. At ECHO we train our Realtors that it’s both an art and a science when coming up with valuations. It’s also critical to keep in mind the rules of 25-50-100 when pricing, which I went over a few weeks back.

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First, do not rely on Zillow for the value of your home. I wrote this article years ago titled, 5 Reasons why Zestimites are for Idiots . Second, be aware of Realtors who give you a high price. As a matter of fact, when interviewing Realtors, create a spreadsheet and see what marketing you are getting. With ECHO, you can see that we have 57 items on our spreadsheet which we put in writing though our Home ECHOnomics Guarantee. The smartest thing to do is bring in an appraiser to make sure you are getting the right price and not getting hoodwinked by the Realtor who has very little marketing to offer. Those scoundrels can and will throw out a high number that makes your ears sing. But you end up with Kenny Rogers as “the Gambler”, which never pays off. Now that is one country song I do like!

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Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet.  Some publications he has been quoted in.

Author of business & leadership book How Making a Sandwich Can Change Your World –  The Amazing Success of the PB&J Strategy – Available to Buy Now!

Feel free to ask him a question directly at jeff@EchoFineProperties.com including a complementary  valuation of your home.