Depending on the state of the real estate market, preparing a CMA for a listing appointment can either be a snap or it can cause you to go into total breakdown.
Thank you for reading this post, don't forget to subscribe!The latter is an exaggeration, but when the market is in flux, putting together a CMA can be challenging.
In a market with rapidly rising home prices, you may find that recent home sale prices are not really keeping up with current sales. In a declining market, the same is true, and you will run the risk of exaggerating the market value.
In short, both transition markets present a conundrum for the listing agent because “…comparable properties reflect yesterday’s home sales rather than the current market value,” which is higher or lower “…than a few weeks ago.” in,” suggests Carey B. Reyes in the FirstTuesday Journal.
CMA
Briefly, for the benefit of the newbie, the following are the steps involved in compiling a CMA:
- Go through the MLS to find recently sold listings and gather three to five that match the subject property in age, size, number of bedrooms and bathrooms, and lot size.
- In a normal market, you would choose comps that sold in the past six months. In a transitional market, grab comps that recently sold.
- Typically, you’ll limit your comps to within one mile of the subject property. Again, you may have to adjust this proximity outward to the current market.
Some time ago, experts at Fannie Mae put together a guide for appraisers titled “Fannie Mae Addresses Declining Market Issues,” a copy of which can be found at AppraisalInstitute.org.
You’ll find that some of the information included addresses how to deal with the rapidly declining market we’re experiencing right now, but you can take other useful tips from it as well.
Naturally, if this current market change isn’t your first rodeo, you’ll go through the market assessment process with no problem. Less experienced agents, however, may find themselves panicking or, worse, overvaluing their listings.
This is where a mentor will come in handy. Due to the lack of such a gold mine of information, you can do your final analysis by your broker to ensure that it is compatible with the current market conditions.
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