Dear David: A number of agents are advertising a free CMA (Comparable Market Analysis). How useful are these, and are there strings attached? – NOT READY TO COMMIT
DEAR NOT READY: Every homeowner wonders what their home is worth, and the answer often depends on who you ask. Of the nearly two thousand Realtors in Kitchener-Waterloo and Cambridge, a number advertise a free CMA (myself included), and the vast majority will provide this service upon request.
Valuations tend to be as subjective as the person who provides them, so to get the most out of your “freebie”, you’ll need to choose your agent carefully. CMAs are not an exact science. Their accuracy depends on an agent’s familiarity with the market. Realtors who are very active in the industry tend to study market patterns on a daily basis, while part-time agents who treat real estate as a hobby may be slower to spot emerging trends.
Much like an appraisal you would get from the bank, a Realtor’s market assessment is a snapshot look at what your home may be worth if you were to sell it today. Because the real estate market is constantly changing, a market assessment from two months ago is out of date already, and one you receive today may not be accurate tomorrow – or next month. Agents tend to offer a selling range instead of an exact price, which gives these values a little bit of wiggle room.
Assuming you paid market value for your home and have maintained it in the same condition it was in at the time of purchase, an agent could get away with just “doing the math” when estimating its current value. For example, if you purchased for $300,000 and the market has gone up 50 percent, the agent should be able to estimate the current value with a reasonable degree of accuracy. That said, if your home had a new roof and furnace when you bought it 15 years ago, and those things are currently in need of replacement, it may not be the same house as it used to be.
Having an agent visit your home personally can clear up some unknowns and often improve the accuracy of your estimate. When I visit homeowners for a free market analysis, I create a checklist of jobs that should be done if they plan to list the home for sale in the near future. Most of these are not major items, but a combination of little things that typically catch a buyer’s eye. If a seller can identify and resolve a half-dozen of these minor issues, they’ll often make a better impression with buyers and can set themselves up for a more successful sale.
If you receive a CMA but don’t plan on moving right away, it may be wise to get another when you’re closer to taking that step. The real estate market is less volatile than the stock market, but it can shift on a weekly or a monthly basis, and this can affect your budget if not taken into account.
PRO TIP: a free CMA tends not to have any strings attached, but that doesn’t mean that the agent isn’t invested. A Realtor has their time and expertise to offer, and performing a thorough estimate can easily eat up several hours, especially for a unique property. Most agents are glad to provide this service, and sincerely appreciate a customer who respects their time and effort as much as they would their own.