The process of determining the value of a home is a complicated one. There are many factors that can be considered when trying to determine the worth of your property, including how much it costs to live in the neighborhood, how close you are to public transportation and schools, whether there is an HOA (homeowners association), and what other properties in the area have recently sold for. One of the most popular methods used to determine the value of a home is a comparative market analysis (CMA). A CMA involves looking at recent sales of similar properties in your area in order to come up with an estimated value for your home.
What Is A Comparative Market Analysis (CMA)
A comparative market analysis (CMA) is an evaluation of two or more properties to see how they compare in terms of features, size, location, and price. It can be used to help you determine whether you are getting a good deal on a property or whether you should keep looking.
You can get a free CMA from a real estate agent, which will give you an idea of what properties in the area are selling for. You can also use online tools to compare prices of similar properties.
The CMA compares your property with similar properties that have been on the market in your area. This can include homes outside of your subdivision, within a 3-to-10-mile radius of your home, and in your zip code. The CMA will highlight several factors that may affect the price of your property in relation to other properties in your area. Such as number of bedrooms and baths, square footage, amenities, age of the property, and tax implications.
Keep in mind, that system generated CMAs don’t really know your amenities and specific types of information tailored to your unique home. They system can spit out figures based on public information. Depending on the system-generated tool you are using, this may be able to come close in range. Especially if you are using one that is provided by your real estate professional, and it is pulling from the Multiple Listing Service data. The CMA is one tool to try when determining your home’s value. And then of course, there are a few others.
Zillow and Other Online Valuation Tools
Zillow is one of the most popular online valuation tools. It uses public information to generate estimates of a home’s value. While it can be helpful in getting a general idea of a home’s value, it should not be used to determine the sale price of a property.
Zillow is an algorithm based on public data. Zillow has never seen the inside of your home and it’s a computer. Zillow comes up with the value-based upon what you are selling for. This can be a 3 to 10-mile radius of your home, or more. They look at things like size, bedrooms, bathrooms, lot size, etc. and they compare them to your neighbors. But things they cannot take into consideration are upgrades, views, location, if your home is in a cul-de-sac or corner lot, whether you own solar, etc. And all of these factors have a huge impact on the value of your home.
Zillow even acknowledges their lack of accuracy stating that “In the U.S. as a whole, Zestimates are currently within 10% of the final sales price 71.5% of the time. And they encourage you to get a more accurate evaluation by a licensed Realtor or appraiser.”
Other online valuation tools include Redfin and Trulia.
Working With A Real Estate Agent
Working with a real estate agent is the best way to get an accurate valuation of your home. They will take into consideration all the factors that affect your home’s value, such as upgrades, location, views, and more. A real estate agent will also be able to give you a list of recent sales in your area, which can help you price your home competitively.
Here are a few things to consider. Remember, you have to think about what will an appraiser say, and what will a homebuyer most likely do? Size, condition, location, marketing and negotiating. All of these have a huge impact on the price of your home. Think about it. You cannot compare a home that is 2,000 sq. feet to a home that is 4,000 square feet. They are not comparable. You must make sure you’re comparing size the same way an appraiser would. When there is enough inventory, an appraiser will generally prefer a range of 200 to 400 sq/ ft. larger or smaller than the actual space to compare prices against. This is normally a difference of 20%. If there isn’t enough inventory, they will make adjustments in their evaluation of what the home is worth based upon the difference in size.
Now let’s think about condition. You cannot compare an outdated home to a fully upgraded home. These are things that system generated valuations cannot detect. When pricing, you have to look at things like, how upgraded is your home, how modern is it, what is the landscaping like, are you in a great location close to freeways and shopping, how is your area compared to others, are there any nuisances like power polls, heavy traffic, or anything else that could be considered undesirable.
With the right pricing and marketing, your home’s condition can be displayed in the most flattering light to attract more homebuyers. To learn more about how important marketing is, watch for more of our blogs and videos.
Remember, when pricing, it’s natural to feel like your home is worth more than everyone else’s because we have an emotional attachment to it. But you’ve got to look at all the variables. As real estate professionals, we know what comps to compare your home to and how to look at things from the eyes of the appraiser.
Online valuation tools can be a great starting point when you are trying to determine the price of your property. However, it’s important that you consider all factors before determining a final sale value for your home, such as upgrades and location. If you’re considering selling your home in the near future but have some questions about how much it might sell for, contact our real estate team. We will be able to give you a more accurate valuation of your home, as well as provide helpful insight into the selling process.
By the way, our CMA tool does provide a very close range. So go ahead and click the button for your home’s value. In addition to that, schedule a consultation so that we can provide the valuation that is very close to accurate.