Friday, April 22, 2016

Why did 3 Realtors have such different opinions of my home's value? - By Matt Trudel

This is a question I was asked at an appointment with a potential seller. They had gotten three Comparative Market Analysis from three different local agencies. All three were considerably different in price, one was very low, one very high, and then there was one in the middle. A fair question to ask, and without reviewing the CMAs in detail, a little tricky to answer. The easy and short answer is the realtors just have different opinions, but there is more to it than that.

Let's look at the CMA that came in considerably lower than the tax assessed value by the town. This should be a red flag to any seller. More than likely the realtor did not make appropriate adjustments or was using very poor comparables. Picking homes that are truly comparable in size, style, and age is very important. Occasionally a home's value will be lower than the assessed, but there are solid reasons for that and should be thoroughly discussed. 

Now for the middle CMA which appeared to more in-line with the towns assessment, but a little higher than the towns. That had six sold homes that were similar in age, style and size. Adjustments were made on large items like garage and finished basement area, and some small adjustments on bedrooms and bathrooms. Overall a straight forward CMA with normal adjustments, in my opinion. extremely high CMA was not even close in my opinion, it was a pipe dream. Four of the properties used were currently on the market and not under contract. Not to say that there isn't that one person out there that might overpay for a home, but this was a good example of overpricing a home with the hope of being the high bidder and getting chosen as the realtor to list the property because they put the highest value on it. Also known as buying a listing. While I agree that properties on the market currently can influence the listing price because they are the competition, they should not be used in a CMA to determine the value. Sold properties should be used in a CMA when determining value, just like appraisers do.

This is why I always stress that the seller needs to be informed and a part of the process when it comes to preparing and reviewing CMAs. What one realtor values a garage at could be greatly different from another realtor’s opinion. Asking questions until you feel both comfortable and confident about the pricing and how it was arrived at is very important. Realtors are still going to have different opinions about your property's value, but you need to know how they arrived at that value and decide on if you agree with the adjustments they made in the process.

Matt Trudel- Owner of Five Star Realty.

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