Comparative Market Analysis
The comparable market analysis (CMA) is a critical step to the home selling process. A comparative market analysis adjust similar sold homes in your neighborhood to compare to your home. A CMA is NOT the average price per square foot in the neighborhood for similar homes. Appraisers will tell you that the smaller the home the more it cost to build per square foot. The large homes which are just more bedrooms and living areas cost less to build per square foot. Appraisers adjust each comparable to account for this. It is common that a smaller home in the neighborhood can be selling for $150 per square foot; whereas, the larger homes could be selling only $100 per square foot. On top of this value is added or subtracted to the comparables based on additional items either in your home or the comparable. Your three car garage will add another $5k value to a comparable that only has a two car garage.
My CMA will adjust the comparbles like an appraiser adjust their comparables. The process is lengthy, but it gives you, the seller, a more accurate value of your home. By confidently knowing the end value, we will also know which boundaries we can push to squeeze the most out of your home.
Unfortunately, most Realtors will perform a CMA based on price per square foot. These Realtors underprice the smaller homes in the neighborhood and overprice the larger homes. If you have a smaller home in the neighborhood in a neighborhood and most comps are of larger homes then it’s common for other Realtors to state your home is overpriced. The solution to this is to put adjusted comparbles in an “Additional Information” tab on MLS. This extra communication is best solution for homes that are the smallest square feet in the neighborhood.
The best example I have of the above paragraph was a neighbor. The neighbor was selling with a relocation company. He had to use one of their agents. I adjusted comparbles for him to help him set the list price. The relocation Realtor listed the home at my adjusted comparable price, but she could not defend this price to buyer’s agents. She kept getting offers $40k to $50k below the list price. Buyer’s agents were using the average price per square foot to run comparables. There were NO smaller homes that had sold in the neighborhood for over a year. All of the other comps were over 500 square feet. The neighbor convinced his relocation company that I was the best Realtor for the job. I got the listing. His home was under contract in five days for the price that seller wanted.
The Listing Agreement
Once we establish a price, the next step is to enter into a listing agreement for three months. I use a shorter listing term for several reasons. First, it makes you the seller more comfortable signing with me. Second, if I have to refresh your listing after three months, I can cancel and relist it without violating any MLS rules. The listing agreement will be signed electronically by all parties.
The Seller’s Disclosure is filled in at this time. This is five pages of information for the buyer about your home. You may also fill out a Septic Disclosure (if applicable).