09 June 2017

Market Analysis in Real Estate: Art or Science?

Last week when accepting a new listing (a house to sell), I was reminded again what a sticky task a CMA (Comparative Market Analysis) can be. Even though I have done so many in 25 years of practice, I still wonder if it’s art or science or both. Case in point: In summer last year we had found a house for wonderful clients from Argentina. The clients did a great job in tastefully upgrading it and loved living in Boca, but two weeks ago we got the call: the husband had received a fantastic job promotion and thus the couple had to move again; did we have an interest in selling their home?

Preparing for meeting with them, my first impression was that the market hadn’t moved much since their purchase. But: they had upgraded and renovated quite a bit. They have a corner lot with only one neighbour and a golf course on the other side. They have a golf-course view. And: the school districts boundaries in their area have been reassigned, but our clients were lucky and stayed in the A-rated district.

So I started evaluating their house with RPR, a great tool available to real estate brokers and agents that starts with an automated valuation model which can be adjusted. To be on the safe side, I did a cross-analysis through our MLS system, and promptly came up with a different price corridor. So I did the third approach and pulled all relevant data into an Excel spreadsheet. From there I adjusted comparable houses with the parameters licensed appraisers use (which I am not), following UAD guidelines and area specifics. That was rather tedious but finally came up with a result I feel confident about. Photos are done and should be in tonight, so I’ll put the house on the market this weekend and hope my work pays off.

Free Market Analysis for your Southeast Florida Modern Home

Because in the end, the market price is not determined by the Realtor, or by what the seller wants or needs, but by buyer demand. Coming close to that seems to me at least as much art as science.