What prompts this blog entry is a request from my friendly neighbor a few days ago. The family has been renting the home next to ours (in Santa Teresa
in San Jose, CA) for a few years now. One evening, they came to me and told me that they would be very interested to buy the house they live in. The issue is that they had no idea about how much to offer to the owner. Here is a Realtor's answer to that question: run a Comparable Market Analysis (aka CMA).
Running "Comps" or "Comparables" (in Realtors' language) is by far the most critical activity and takes up most of the working hours of any Realtor. You need Comparables right at the very start of the listing process (for regular sales, foreclosures
and short sales
alike), every time a buyer sees a place he likes, for every open house you host, for most real estate marketing activities (ever seen a flyer in your mailbox about how much your home is worth and how much similar homes sold in your San Jose neighborhood?), market research, etc. Comparable Market Analysis are about comparing price of active, pending and recently sold houses in the neighborhood with similar criteria and features ranging from square footage, number of bedrooms/bathrooms, yard size, street location, amenities, date of sales, street location, etc.
There are many helpful tools and research available online to conduct CMAs. The issue is that none of the analysis and estimates will ever be as accurate as the ones that are drafted by true Real Estate professionals. Here is why. Realtors have access to other Realtors comments (e.g. in MLS Listings) not available to anyone else, can tap into their expertise of the local market (e.g. if they sold, held open houses and/or visited similar homes in the same neighborhood no longer accessible to the public), have access to neighborhood experts (lenders, appraisers, fellow tenured Realtors) within their network, understand the "market value" of upgrades (some more desirable than others), among many other things. When dealing with short sales and foreclosed homes, the value added of a Realtor is even greater as home prices and discounts vary greatly depending on which stage the house and its owners are in the foreclosure process.
To wrap this entry, I would say that no one can really say for sure what a home is worth. Beauty is the eyes of the beholder as always, but it pays to scratch under the surface with the help of a Realtor, better equipped with tools and proprietary knowledge to uncover early as many issues as possible behind a shiny virtual listing.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575