CMA's Can Be Faulty on Price!
A Comparative Market Analysis or CMA is definitely a tool for educating ourselves regarding pricing, but it's certainly not as in depth as an appraisal. Matter of fact in some states like Maryland all CMA's must have a disclosure stating they are not an appraisal! It's the law! A CMA entails information on homes in your subdivision that are similar to yours. A CMA is simply trying to compare apples to apples. I can't give you the pricing on a full finished basement if you're a ranch on a slab.
We first have to look into the sold properties in your neighborhood because the asking (listing) price is not necessarily what you can expect as your selling price. When we look into the solds in your neighborhood, closed home sales that finalized in the hay days of 2005 for example are not the 2009 values. We have to look at most recent sales and some appraisers will only look in the last three months. Foreclosures and short sales are comps. Appraisers are really not supposed to pull sales data from nearby communities either. Subdivisions that are close to one another may have quite different pricing.
Back in the day when no one ever heard of a short sale and the foreclosure was something that happened during grandma's memory in the Great Depression, the odd foreclosure was glossed over as a comp. They are no longer the exception to the rule in any neighborhood, be it a condo or a golf course community, in town or in the ex-burbs. I'm not going to touch upon rural properties or properties not in subdivisions for the sake of time. I like my blogs to be concise and informative, not a class.
When you look at the sold numbers, don't forget to include the $13,000 in closing costs someone may have paid for the seller. That will also be subtracted from the final sales price to give you the more accurate sales number. Seller's contributuions to closing closts lowers the seller's net. Additionally, we can discount the price based on number of bathrooms for example. If the closest sales price to you was a home with one more bathroom, you will have to subtract approximately $5,000. If you have an additional bedroom, you can add $10,000. The bedroom must have an integral closet and a window, not just a window and it must be a full sized window, not a 1/4 window in a basement. Many appraisers won't even count bedrooms in a basement any more.
Then there's pending properties or sales contingent upon appraisal and inspection but hasn’t yet closed. A sale can be pending for whatever length of time both the seller and buyer agree. I get many calls from buyers wanting to know the status on a house that is closing 60 days from now. There is the odd case where a buyer wants to secure a home but can't close for 60 days. If the seller is fully aware of the circumstances and is thrilled that the buyer is paying his own closing costs, won't do an inspection and is paying cash and there will be no appraisal, they may want to give the buyer those 60 days. Pending/contingent sales are unreliable because anything can still happen to upset the apple cart. The buyer can walk away from the deal, financing may fall through because your property didn't appraise or the buyer lost his job and can't purchase. Also, we won't know final closing price until the sale is final and it's either posted in the multilist or the selling or listing agent will let us know sales terms immediately after closing. Do you want to be compared to the exact same house where you know from your neighbor that the sellers accepted a painfully low offer due to a divorce? If we call the agents involved, we'll only receive general information because of their duties to their respective clients.
Expireds and withdrawns, listings that failed to sell on the first (or maybe only ) go around will provide a less clear image of your price. If you want to list your $350,000 home for $400,000 "just because" your neighbor did and they failed to sell, you'll better understand that overpricing will get you in the same status - nowhere.
It's important to realize that the old style of real estate has left the building. There's a reason we're no longer seeing "Mr. Rogers Neighborhood" signs. The days of the neighborhood agent knowing everything there is to know in his/her twelve street neighborhood are gone. It's a global market and you have to have all-around, all-inclusive, comprehensive, exhaustive, overall, thorough, knowledge
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