Hi all!

I hope this finds you doing well! I spent last week in the second portion of a three-portion GRI-class. GRI is short for Graduate Realtor Institute, and it means I've taken additional education on how best to help my buyers and sellers meet their needs when it comes to buying and selling homes. I learned SO much information last week. I'm glad the class is broken up in to sections so that I can put what I learned in one portion to use before learning more.

Anyway, this week I am going to talk about CMA's, or rather Comparative Market Analysis. This is a tool that helps both buyers and sellers when they are listing their home for sale, or searching for the home of their dreams, or making the steps to get to that point.

In short, a CMA is a "snapshot" of what the market around your house looks like "today." As soon as a new house comes on the market, or another one sells, it will change the statistics, hence the term "snapshot." A CMA is something that your Realtor can put together for you, and they will look at all the sales in your neighborhood, to include thos that weren't listed on the multiple listing service. The point is to look at those houses that are "comparable" to yours. If your house is move-in ready, the house down the street that sold as a fixer-upper isn't a comparable--but it does help to look at the price to guage where you need to be to sell yours. With this CMA, you can determine the average listing price, and average sold price, price per square foot, among other things.

This tool is helpful in determining your list price when selling. For example, let's say the house on the corner sold last week, and you've decided to list yours. Your house is similar in age, size, lot size, number of bedrooms and bathrooms, you don't want to price your house $35,000 more than the one that just sold. Why? Because a smart buyer will use these same tools to help determine if the house they are considering buying is worth the asking price. They will use it to determine what they should offer for a house.

So why not just list a house at $35,000 over the neighbors house that sold last week when someone can just "offer whatever they want to?" Well, because statistics show that a property that is overpriced to start out will end up selling for less than it would have had it been priced properly to begin with. When a potential buyer (and remember, as a seller, at some point you are also a buyer) looks at a house that's just been listed and it's overpriced, they won't take the seller or the price seriously, it stays on the market longer and then potential buyers start wondering what is wrong with it, so they wait longer to "see what will happen" before making an offer. In turn, the seller, wanting or needing to sell the house gets "more" desparate and needs to keep lowering the price to get the activity.

So how do you KNOW for sure if you're house is listed at the right price? Well, at the risk of sounding flip, when you have a contract on the house. In reality, your house is worth only what someone is willing to pay for it. How many people do you know today that are willing to pay $35,000 more than the house that sold on the corner last week--for a similar house? I don't know any. Besides that, when it comes to getting a loan on that house that is priced $35,000 than the neighbors...the appraiser the bank hires uses the same comparables those buyers use. And if a house doesn't appraise for the contract price, the bank is not going to lend over the appraised value. If you still want that house, though, you can always come up with that extra as a down-payment on your own. I wouldn't recommend that, though.

The best thing to do is talk to your realtor, or if you're a FSBO, do your research. Part of selling a home is getting the exposure for your property, and there are many ways to get exposure...I'll talk about exposure and marketing a house in another entry.

Have a GREAT day!