I frequently boast on Facebook when a buyer of mine gets a house for way under the appraised value……Although I really think it has more to do with a listing agent who didn’t know what the house was really worth than my ability to get a good deal for my peeps. An appraisal is like the CMA that agents should do when they list a house. Both are really more focused on the comparable houses, rather than the house being marketed.
And I guess that is what this is all about today: Listing agents that don’t know what their listing will really sell for.
When I was a new agent, they trained us to do a CMA, or Comparative Market Analysis. They give you a sheet of paper that has values for things like a half bath verses a full. What a square foot of space should be worth in each price range. What a basement is worth. Etc, etc, etc. I remember all the new agents sitting there like the first day of algebra class, trying to work through the formula with no idea what any of it really meant, or having a clue as to the concept behind it all. We were just following a formula, and in the end, we all had our value for the house and were really proud of ourselves.
I don’t think many agents have really gotten past doing it this way. I say that because on several occasions, I have talked to agents who have told me how they did a CMA when they listed a house and are shocked that it didn’t or hasn’t sold for more. According to the comps, the house is a bargain they alway say.
Well, that must not be true, because if it were a bargain, it would have sold. I think that most agents don’t take a close look at the house and add/subtract value for things that aren’t on the CMA list we all use. These things are features like a big house with a tiny backyard whose probable buyer is a family, the house that backs to an apartment building, the house with purple carpet, the house with an awkward floor plan, or just about any feature that knocks it out of being somebody’s first choice.
I recently sold a house in Beaumont Reserve that the listing agent told me how shocked she was that it didn’t sell for about $50k more than it did. It was the same floor plan as others that sold for more. The lot was typical. The finishes were typical. On the CMA sheet and appraisal, it was worth more. Here is the deal, the house was painted off white, with off white carpet, and the seller’s furniture didn’t help any either! See, to a buyer, the house seemed just too plain to sell for what other similar ones did. My buyer painted it and spend some money on updating it. It is now in line with what the other ones are selling for in that area. That house was worth less in the “Real” market than what any apprisal or CMA showed because neither has a value for how a buyer feels about a property.
The “Real” Market is where the rubber meets the road. An agent should be able to look at the comps, do the science part of the CMA, and then also be able to make adjustments for things that buyers will respond positively and negatively to. Why? Because they are things that matter to a buyer, and a house is only worth what a buyer will pay for it.