“So, How Much is That House REALLY Worth?” Realtors, Insider Knowledge (Literally) & “Comp Credibility”

“Good,” “Better,” and “Best”

One of the key services performed by Realtors for clients is analyzing a home’s fair market value.

Buyers’ agents do that analysis — called a CMA, or “Comparative Market Analysis” — to help clients determine how much to offer for a home; listing agents go through the same process to help would-be Sellers choose an asking price.

In both cases, fair market value is determined by reviewing historical data.

Specifically, by scrutinizing the 3-4 most similar homes that have recently sold nearby, known as “Comp’s” (“Comparable Sold Properties”)

(Note:  why not price off of “Active’s?” Because their value isn’t established until they’ve actually closed.  However, conscientious listing agents still preview relevant Actives, because they represent the competition).

“Inside Job”:  Realtor’s Market Knowledge

When it comes to doing CMA’s, however, not all Realtors are created equal.

On the contrary, experienced, local agents have a BIG leg up, because they know the relevant housing stock best.

Here’s how I’d characterize an agent’s credentials to do an intelligent CMA:

Good:  the agent has checked out the spec’s for a given Comp (style, finished square feet, photos) on MLS and county tax records.
Better:  the agent has physically been in the Comps recently, either on Broker Tour or doing a showing with a Buyer.
Best:  the agent personally sold one or more of the Comp’s — that is, they represented the Buyer or Seller in the most recent transaction.

Besides home Buyers and Sellers, wanna guess who also covets agents’ (literally) inside knowledge?

Appraisers.

Which is why they routinely contact listing agents to get more of a flavor for a home (updates or lack thereof, floor plan, condition) than can be gleaned from MLS.

See also, “More Than This, Less Than That“; “Real Estate Bracketing — Advanced Beginner Version“; “The Science — and Art — of Doing Comp’s“; and “‘Bracketing,’ Explained.”



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