How do you choose a list price?
In Real Estate, CMA means Comparative Market Analysis. Another acronym is BPO or, Broker Price Opinion. Both are reports prepared by your Realtor to help you, the consumer, identify your home’s market value.
This report is more art than science. The proof is that if you get three Realtors to do a CMA on the same house, you can get three completely different opinions. The funny thing is, we all have access to the same data.
How can that be?
I was inspired to write this post when I read fellow blogger Ted Makel’s post on the flawed data in our MLS (Multiple List System). He points to an endemic flaw in how we report our numbers. He believes our numbers do not tell an accurate story of a home’s value. He is absolutely right.
Ted demonstrates his point by telling the full story of how a home gets sold- List, relist, reduce the price, take it off the market, change broker, etc. This journey is relevant because without it, you might think a home sold quickly and at full price. If enough homes have a long and complicated journey, than all of the averages, trends and medians will be wrong. You might inaccurately assume that homes, in general, are selling faster, slower or closer to asking price than is truly the case.
This will lead to no end of frustration for a home seller.
Which leads me to my point. A CMA starts with an overview- how many homes are available, pending and sold? What are the average and median prices, price per square foot and days on market? If you stop there, however, you are in trouble.
Forewarning, Chitlins, this is my soapbox.
Only a local Realtor is going to know the real story of what is going on in the neighborhood. We know who has unusually bad or good personal circumstances. We know why a particular home sold in too many or too few days. We’ve seen the inside of the home that sold for a shockingly high (or low) price and we can tell you how that happened. We can tell you how all of this relates to your unique situation.
Residential Real Estate is about people, not just numbers. Numbers will always give us the base knowledge, but the fine tune strategy is determined by a set of factors unique to a particular home and home seller.
Identifying that strategy is the art. Is your Realtor an Artist?
Kendyl Young
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Thanks for the mention. It is very frustrating. I will be at the MLS committee soon to see if we can, at least get the calculation based off the original list price. They wont be able to go back over prior listing periods, but it will be a start.