How To Read A CMA

Dated: June 13 2022

Views: 53

The number one question sellers have is, “What is my home worth?” Value is a complicated idea and varies depending on your purpose. Capital tax basis, property tax base, and insurance replacement valuation can all be different. Not to mention lenders’ risk management appraisal valuation.  But what sellers are asking is, “What will my home likely sell for?” This is ultimately decided mutually by the buyer and seller in negotiations.  We, as real estate professionals, help sellers decide a list price and possible sales price by doing a comparable market analysis, sometimes referred to as a CMA. We look at what similar homes have been selling for by comparing homes with similar locations including cities and schools. We look for similar size homes in square feet, bedrooms/bathrooms, floor plans, and lot size. Lastly, we consider the condition of comparable homes, such as age and style of finish and fixtures as well as unique or similar amenities.  

 

In some cases, homes have really unique features that we need to pay attention to. This can be lot features, architectural features, or specific amenities such as wine cellars or outdoor kitchens. Added features can also take away from a home’s value if it is not well done or not widely desired. (Ironically, pools are value neutral as there are as many buyers who love pools as those that don’t want a pool at all.)

 

We also believe that floorplans are more important than square footage.  This tends to be more subjective and often difficult to quantify. Even still there are certain general rules that prove to be true. Open floor plans still tend to be more popular, but since the pandemic with working at home becoming more prevalent, having spaces for home offices or separate space in general has become more important.  Indoor/outdoor seamless living spaces are valuable. Can the cook be present with guests whether inside or out?  Primary bedroom location and size continues to be important, but there is a great variety of what is valued depending on if buyers have or plan on having children and their desired proximity to the primary suite.

 

Finally a word of caution regarding Automated Valuation Modeling or AVM such as Zestimates. They are most accurate in newer developments that have limited variation in floor plans. In older neighborhoods with a wide variety of additions and remodeling or numerous custom built homes AVM only can show trends and not specific values. 

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Hutchens Hamalian Properties Group

Hutchens Hamalian Properties Group is one of Dudum Real Estate's top Lamorinda teams. The Lafayette-based partnership focuses on real estate services in central Contra Costa County. Sherry and Adam, b....

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