Best CMA on earth

Hey all, All month we will be talking about a new type of listing presentation that helped us to list 114 homes in a single year, all at 8% or more. Last week, I began laying a foundation for the presentation by talking about where to get seller leads and busting some of the commonly held myths about listing properties. This week we will dive in the presentation. And the starting point for any good listing presentation is a great valuation for the property you want to list. Anyone who knows numbers can tell you that, as a listing agent using the traditional method of doing a CMA, you can make the numbers say anything you want. Here's what I mean. With the traditional CMA method, the agent selects three recently-sold properties that closely represent the subject home (or the home being valued). In most markets, it's easy to find three properties that sold high, three that sold average, and three that sold low and still have many other comparables from which to choose. What many agents do (and what they teach) is to use the least expensive set of comps for the CMA. This method makes the case for listing the home as inexpensively as possible and allows it to sell quickly. However, as a seller's agent you should be getting your client the most money for his property, not co-conspiring in a giveaway. Zig When Everyone Else Zags What I do in preparing a CMA is to take data from three sources: tax records (sale and assessment data), the closed comparable listings in the MLS, and the active comparable listings in the MLS. Let me explain. 1) Tax Records "Adjusted" First I look at the tax records to determine what I feel to be the "adjusted" current value of the home. For example, if it sold three years ago for $150,000, and there's been an appreciation rate in that area of 12-14% per year, I calculate the appreciation (3 x 13% = 39%, or $58,500), and then I add that figure to the purchase price. If the home hasn't been on the market for a long time, I'll use the most recent assessment value and adjust it the same way. Certainly this particular method is rather subjective, but an experienced agent who knows his market can get close to a realistic number by using it. However, this is only one part of my valuation. 2) Closed Comparables Next I pull up all the closed comparables in the area or subdivision, going back a reasonable period of time, and I can usually find between ten and twenty of these. (In extremely hot markets where homes appreciate at double-digit rates, you shouldn't go back farther than a few months or so in order to prevent the CMA from being skewed downward.) Don't forget that the amenities and how nice a home looks will affect the curb appeal and saleability of the property but have very little impact on appraised value, so it's best to use as many comparables as possible. In selecting my comps, I use the subdivision, the square footage (with a range of plus or minus 10%), and the number of bedrooms and baths. I then calculate the average sale price of the group, eliminating any outliers up or down (e.g. homes that were foreclosures or distress sales). 3) Active Comparables Finally, I pull up all the active comparable listings. Again, I use the subdivision, the square footage, and the number of bedrooms and baths, but your market may be a little different in how the appraisers select comps. The point is to get as much data as possible! Using the Numbers Together Now we put it all together. Take the adjusted value from the tax records, add the average price from the closed comps, and then add the average price from the active comps. Now take that number and divide by three, and you'll have the true average value for the subject property. Write down this new number somewhere, add 5% and subtract 5% from it, and you'll have a "reasonable range" for the value of the home, which tends to be plus or minus 5% from the average. In most markets it's reasonably easy to support a value within 5%; so once the property sells, getting the appraisal shouldn't be an issue. I know this is an out-of-the-box way of doing a CMA, but it will absolutely stand any amount of scrutiny by clients, other agents, or – most importantly – appraisers. Moreover, using this method will protect you from accidentally over-pricing or under-pricing a property. Most importantly, it will reinforce the fact that you're a market authority and know what you're talking about. If a seller client should be harboring a suspicion that you're trying to skew the numbers, his or her fears will quickly be allayed because you've considered every possible comparable in the current value of the home. Nothing except a pre-appraisal could be fairer. Tomorrow, I am going to show you a tool for how to do this valuation in less than 10 minutes. If you have any trouble at all implementing this CMA, shoot us an email. We would love to hear from you.  Until next time, Levi Jones PS. We give away most of our tools and training for free, but if you haven't checked out Pipeline Pro Tools, you owe it to yourself to look into it. The system is dirt cheap to get started and there is no longterm contract. Click here for a live demo and you will see the set of tools that we use as the basis for all of our lead generation and listing strategies. Guerilla Realty This email was sent to dsoldit.blogpost@blogger.com . You probably joined our list by signing up for one of our amazing free tools, free guides, or you wanted to be notified when we announce new stuff. 99% of everything we do for agents is totally free, no strings attached. The other 1% is even better. Don't let our updates make you mad. 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