I see advertisements for “free CMA”. What is a CMA and how much does it usually cost? sometimes is a “comparative market analysis” and sometimes it the letters stand for “competitive market analysis”. A market analysis is how real estate agents determine how much a house will sell for. The CMA compares homes that are similar to the subject home and are in the same area and have sold in the last year.
Most real estate agents will do a CMA to determine how much a property might sell for so that it can be priced right.
To date I have never found a real estate agent who charges home owners for a CMA, yet many advertise that they will provide a free CMA. Agents and real estate companies sometimes charge banks for a BPO, which is a “broker price opinion”, which is pretty much the same as a CMA but it isn’t free.
The free CMA should not be confused with the appraisal which is done by and appraiser and costs a few hundred dollars. They use the same methodology that is used for the CMA but the appraisal is more detailed. The “zestimate” on Zillow is more similar to a CMA but not as accurate because the zestimate is an “auto valuation” done with software using data which may or may not be accurate. The CMA is more accurate than the zestimate.
Is a free CMA a goof value? I guess it depends upon who is doing it.
We are getting a lot of mail these days from people who want to buy the house. I think the combination of having a household with someone (not me) who is over 65 and no mortgage triggered the tsunami of offers from people who want to buy our house for cash, now without asking for any repairs.
As a real estate agent/broker I know that the people who want to buy my house can buy it and flip it or rent it out. I also know I can get a lot more money for it if I do some repairs. In fact if I were to sell I think I would open a line of credit against the house and use it to pay for repairs and upgrades, several months or even a year before putting it on the market.
It is also true that no matter what I tell you or what my kind claim, selling a house is rarely easy and hassle free. It isn’t the houses fault. People are unpredictable and even difficult at times and moving is always stressful. Putting some effort into selling a house and having some patience pays off. People who can plan ahead tend to do a little better than those who suddenly decide to sell.
I know from experience that I can get a lot more for my house if it is in good repair. The smallest repairs can be intimidating to first time home buyers who sometimes do not own a screw driver. Buyers can over estimate the cost of a repair and as a result they will offer less or they won’t make an offer at all.
Yes you can survive a multiple offer situation and be the winner. Be realistic about the value of the home you are making an offer on and understand that sometimes in multiple offer situations the highest offers are below the asking price or maybe at or slightly over. Also know that if it doesn’t work out a better house will come along.
Occasionally I work with buyers who are concerned about the amount of work I have to do to write an offer. That is my job and I am always happy to write an offer even if it seems to be a long shot, so bring it on.
Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Often buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. In todays market the seller is calling the shots.
The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. More cash in the mix means that there is a greater chance that the loan will close.
Closing dates matter. Buyer who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.
Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.
The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer. Buyers sometimes offer less because that is how much they can afford. That strategy mostly isn’t going to work.
When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now. Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.
Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.
Do not and I repeat DO NOT skip the inspection – do make your offer inspection contingent. Some buyers are making offers that are not inspection contingent in hopes that the seller will consider it a better offer. Sellers with half a brain should know that the inspection protects them too. Please have a complete home inspection before purchasing a home.
Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.
Last weekend I got a couple of inquires on homes that are shown as being for sale on Zillow. When I looked into our MLS in both cases the homes had offers on them. The data that is in Zillow is fed from the MLS but until May 1, 2017 agents can by pass the data feed and manually input the listing. There are a few reasons for doing this and to many of us, Zillow is just for fun.
There are homes that are for sale by owners in Zillow that are not really for sale. I talk to the sellers and they tell me they are just kind of trying it out. Rather than putting the listing in the “make me move” category which is for “trying it out”, they go ahead and put it in as for sale by owner.
Most of the homes that are for sale in the area are accurately represented on Zillow. Real estate agents who do not like Zillow avoid looking at the site. I like to take a peak once a week or so. The agents with their faces by the homes for sale are paying for a zip code. In most cases they are not listing the home for sale and sometimes they know almost nothing about it.
Real estate companies and agent teams are getting bigger and bigger and it is all about “lead capture”.
Everyone has to start somewhere to get experience. The way real estate agents get experience is by directly working with home buyers and sellers. An agent gets a license and then lets everyone know that he or she is ready to help everyone with the biggest and most expensive purchase or sale that most of us ever make.
It takes 90 hours of training and a passing mark on a test to get a real estate license. New licensees generally don’t know how to write a purchase agreement, or how to be a real estate agent. That is learned on the job. Every licensee is required to work under a broker and the broker is required to provide supervision. Most real estate companies spend a lot of time and money recruiting new agents because the failure rate among new agents is high.
Yet I read questions in Facebook groups and other places written by agents looking for advice and guidance. I am concerned by the questions and by the fact that they are not asking their brokers. Often agents are not aware of what they don’t know and end up learning the hard way.
Real estate agents learn on the job. A new agent will charge just as much as an experienced agent charges, and maybe even more because he or she has start up expenses and a less favorable commission split with the broker. (Agents split their commissions with their broker)
It doesn’t hurt to interview an agent and ask how long he or she has been a full time real estate agent. Agents should have references. A huge part of working with clients is problem solving. That takes some experience.
Fair housing is the law of the land yet I have witnessed unfair housing. I have had sellers tell me that they don’t want to sell to “those people”. . . but they did.
Minnesota has one of the biggest home ownership gaps in the country. Statewide, 77 percent of white households owned their home compared with 39 percent of all households of color owning a home. Housing is part of a bigger picture of financial disparity.
For more information about the fair housing act and other laws visit the HUD portal