The ABCs of CMAs

By Michael Weiss – Agent/Relocation Specialist

Doing a comparative market analysis is an important part of both the selling and buying processes.  However, I feel as though many people that I’ve worked with have questions regarding what exactly goes into a comparative market analysis (CMA), so I’ve decided to take this opportunity to describe the analysis further.

Two important factors: Comparable homes (COMPS) should be in the same geographical sub-market and sales data meant to ascertain value ought not be more than 120 days old if possible.  The markets move up and down each month and values can fluctuate depending on the time of year and outside economic factors.  And as we all know (especially in St. Louis), simply crossing a street can see home values soar or plummet, so location is king.

Of course proximity and time are only two factors.  Simply put, the more similar the properties being compared, the better.  Here are some other factors that are often given prominence in a CMA:

• square footage
• number of bedrooms
• number of bathrooms
• lot size
• garage spots
• cosmetic & systematic upgrades

Look to see that the home fits comfortably into its price range and is not an outlier compared to other homes that have recently sold.

Notice how many days it took to sell similar homes and how far off the original asking price they had to come down to sell.  Where homes sell quickly, you can expect people to want to gain entry when it’s time for you to sell.

Ultimately there is no crystal ball as to whether a real estate deal will work out in the end financially, but if you look at real estate values over the last 100 years the average appreciation of a home was right at four percent.  Homes have different values to different people and it all has to do with a million little factors that play into it.

Remember, for buyers a home’s value is based on what they believe is within reason depending on their personal circumstances, financial and otherwise. Meanwhile, for sellers a home’s value is what someone will offer for it on any given day.  What you should sell it for is a totally different question and can only statistically be justified by intelligent use of COMPS.

Put Your Intentions in Writing

By Liz Rainey – Agent/Relocation Specialist

The first step is always the hardest, but this will help make the process run smoother.  Before you decide to put your home on the market you need to make sure you have clear goals and that you are selling the house with someone that has the same goals and expectations.  Unexpected challenges and situations might come up in the course of selling your home, so having a clear idea of your ultimate goals at the outset is imperative to help you make the right decisions along the way and to remind you when you might need to course correct.

When you are working on your goals it is important to be specific.  Drilling down to the details of what result it is you want your home sale to achieve in your life.

Establish where your priorities lie, either with speed or dollars.  Is your goal to sell your house as quickly as possible or to sell your home at the best possible price, regardless of how long it is on the market (no matter how long it may take).

Being as clear as possible from the very beginning on your priorities and ultimate life objectives for the sale will allow you to communicate these crucial things to your agent, and will power your decision on issues like:

• Which home improvement projects, if any, to complete before you list your home
• What offers you would consider and those that you wouldn’t (paying for closing costs, home warranty, etc)
• How aggressively to negotiate counter-offers, and on which points to push back against a buyers offer

If you are considering selling your house in 2012, outlining your goals and establishing realistic expectations is the best first step to take.  It’s already past the first of the year, and Spring will be approaching fast; start today!

Listen to the economic forecasters such as Peter Yen from the National Association of Realtors.  He was recently in St. Louis speaking about how the unemployment rate is directly tied to real estate trends.  He believes if unemployment goes down in the next quarter we can most likely consider the worst is behind us.  Listen to an established real estate professional; These are the ones that have made this their career.  Every single day they access the latest available property list.  He/She can tell you what has gone down in price, what is under contract, and what has sold for less than asking price. Point being, they actually do know what is happening in the market place and it’s not just from watching the nightly news.  Listen to what these people are telling and follow their advice. Remember this is why you look to them.

Learn to adapt to this market.  Realize that what worked before is not necessarily going to work today so learn how to price your property appropriately and then learn how and when to adjust it.  If you are looking to buy, learn how to make a solid offer before your dream home becomes available.  You don’t want to be caught in the dark, being prepared is always best. Learn all of the parts of a sale contract and the process of buying/selling a house so that you feel comfortable discussing all possible scenarios and variables when that contract is written.

Let go of anger and resentment about the economic climate.  Let go of blaming anyone or anything for the current state of the market.  Let go of comparing neighborhood sales from the past 3 years to what they are selling for now.  If you can get past these things and understand that it is a fact that people still need to move for their own reasons. Then you are truly “letting go.”   A house may not be worth as much as it was in 2006 (when it was, in all probability, over-inflated) but that should also come as good news if you are looking to buy.

By listening to the information provided by professionals, learning how to react and adapt to this market, and letting go of negative re-enforcements, I believe you hold the keys to a successful real estate transaction.

Jen Ross

With the current conditions of the real estate market people have been able to purchase high end properties that they may not have been able to afford in a steady market.  This recent trend to buy that great deal has also left that purchaser wondering what to do with their “old” property.

We see this on a daily basis…in efforts to rid themselves of their old property; sellers are steadily lowering their asking prices with very little to no bites.  This has made the option to put the property up for lease not so bad.  This option that you would think as bad actually can turn out to be profitable in just a few weeks time.

Why is leasing Hot?  People are relocating to St. Louis and are more interested in scouting the area out, so leasing a place has become more appealing.  Some other reasons for the increase in the leasing trend include are attributed to the rise in status of Washington University’s medical school and the nationwide recognition that some of our area hospitals are starting to receive. It’s attracted Medical Students from all over the world to come and do their fellowships.  The rise in divorces has left those couples in dismay scrambling to get some sort of property, so the lease has appealed to them.

Why open your home? We have a lot of clients who are timid about opening their homes to a renter.  What if they damage the place?  What if they don’t pay their rent… etc?  When a lease is done properly it can not only cover your mortgage but could lead to a possible sale.  We make sure to screen prospective tenants for our clients, by running background, employment, income verification and criminal checks.  We also offer a guarantee, if they tenants do not pay their rent in the first six months, we refund our commission.  For the record we have not had to do that.

So when your realtor says the “L”word, don’t be afraid! Leasing can turn out to be a very lucrative move in the long run.

Liz Rainey

If there was a Mrs. St. Louis, I think I would be in the running…

I was driving around the other day when I realized that I am an ambassador for St. Louis.  I stole that name from my days at Fontbonne University when I would show prospective students around campus and give them a better feel for College life as a Griffin, our mascot for those unfamiliar with the “school across the street from Wash U.”  Who knew that way back then I would be prepping for my future profession.

Many instances in my life parallel that of my mother’s.  My mother was raised in University City and went to Christ the King.  I was raised in St. Louis and went to Christ the King.  My mother’s first home was on Stanford and my husband and I recently purchased our first home on, you guessed it, Stanford.

My story isn’t a straight path though, a little over 20 years ago we had just moved into my mothers dream home on Delmar, when my father told us that we were going to be moving to Ft. Lauderdale over the summer.   He told us we would have a pool in our backyard, we didn’t hear anything after that.

After we finished up our summer sports we packed up our belongings and headed for the Sunshine State.  Apparently no one told us that during the summer it rains everyday, but who cared, we had a pool in our backyard.

I hated South Florida, besides the pool.  I didn’t have any friends, all of our neighbors got sent away to camp so I was stuck with my three brothers each and every day.  My parents made a deal with me, stick it out for a year and if I still hated it then I could move back to St. Louis.  By the time the year mark passed, I had completely forgotten about our pact as well as what it was like to have to wear a winter coat.

As the years passed, it was time to pick a college.   Little did I know that I would be headed right back to where I left.  My grandma and mom had gone to Fontbonne so I was considering that as an option and, like most college bound kids, pretty much any school away from my parents was an option.  Long story short, I selected Fontbonne University.  I thought it would be the best of both worlds, being away from home but having family in the area so I wouldn’t be all alone.

It came time to check in the dorms and I told my mom that I had decided that I wasn’t going to go to Fontbonne anymore and that I would be returning back to Florida with them.  Once again I got the “stick it out for a year” speech and 4 years later I graduated from Fontbonne.

Over the years I have been asked repeatedly why did I come to St. Louis when I was in a warm climate?  I used to use school as my excuse, or that I wanted to be close to my Grandma.  School is long over and my grandma is in a better place so it was time to face the music, I love St. Louis.

St. Louis has a magic pull on me; the people here are the nicest in the Country.  The changing seasons provide for rejuvenation and appreciation for long days and warm nights.  I love when I have friends come to town.  It’s hard to try to jam in everything from going to the Zoo, the Brewery, visiting the local eating establishments, and taking in a sporting event.  Each and every person leaves with a little bit of the love for the City.  My list could go on and on but there has to be a close to this eventually.

I am so lucky to be working for Upper End Properties; I have had the opportunity to work with many people relocating to St. Louis (and current residents).  I get to tell them about all of the benefits to living in this great town from the neighborhoods where you actually know your neighbors names, to the free activities that are on a constant cycle year round, to local restaurants off the beaten path.  I get to help people select homes where their children will be in the top school districts and where they will be within walking distance to their offices.  I get to share my pride of the city.

To all of my clients and future clients, thank you for letting me part of your search and thank you for letting me be your Ambassador.

Liz Werle Rainey
Real Estate Agent, Upper End Properties

No Offense to Used Car Salesmen…….

but plenty of people put real estate agents in the same category as them.  When I put on my consumer hat and question why a real estate professional, someone who is there to advise you on the most important asset you probably own or will own, is paralleled with a guy in a checked blazer and wide tie trying to make a monthly quota, I guess I could see it.  After all, lots of agents act like used car salesmen.

Almost everyone (myself included) has had the experience of walking into an open house and then been interrogated by the agent who is standing there.  “Where are you looking, how long have you been looking, would this home fit your criteria?  Are you working with an agent, can I be your new BFF?”  It’s a game of tug of war.  The agent is trying to get as much info as possible in that short amount of time so they can put you on a contact list. You are trying to get out of there without giving your (real) phone number and email so you can avoid being hounded every day going forward.

The same can be said for a used car lot.  I know this because I recently needed to purchase a vehicle.  Each time I got out of the car my heart started beating rapidly and I got a little sick to my stomach.  Just the thought of having to encounter another salesperson who was going to ask me the same questions I’d just answered at the previous four lots made me ill.

After being hounded, came the inevitable ‘hard’ (or ‘soft’, depending on the technique) sale.  “This one is going to go pretty quickly, there have been a lot of lookers! I know you could get this for a really good price right now. If this isn’t the one for you, I’d still love your business!” Never mind that you can assume that they are not honest and that you’re getting hosed no matter what you end up with.  It’s the whole process of dealing with person after person after person….all wanting the same thing from you and you start to feel like a big piece of meat.

I couldn’t help but see a similarity in the way many agents act during an open house.  It got me thinking….why couldn’t there be one person out there who could take my car criteria and desired monthly payment and find me some cars by searching all the available lots?  Maybe there is such a service/person out there, but if so I’ve never heard of them.  I would definitely pay them a fee.  Or the dealer could pay them a fee, whatever.  Just to avoid the leg work and interaction with ten different salespeople would be worth it.  It would be like a car agent.  I mean, you typically use one real estate agent who shows you available houses and then writes the contract and helps you through the inspections, title, survey work, and the whole closing process.

Which brings me round to my point.  Most people (unless they already have a trusted agent) do not utilize a real estate agent as intended.  They go to dozens of open houses, subjecting themselves to torture, and then go home and scour 10 different websites trying to filter which homes meet their criteria.  These websites and listings are bookmarked and printed and lost and then maybe found.  The whole “process” could be made so much easier if they asked one agent to set them up on an interactive website account linked to the MLS (Multiple Listing Service).  These sites show all the properties that agents have access to along with prices, pictures, directions, maps, school statistics, recent solds in the area, and more.  There are notebooks to save listings in and interactive notepads to leave thoughts for yourself or your agent.  They are free and they are awesome.  You call your agent when you are ready to see something.  You can keep your account for 2 years while you contemplate moving.  It’s simple and it’s hands-off!

As a society, we long to simplify, to work smarter, not harder.  If you have an agent and they have not set you up on a site such as this, find one that offers it.  It will save you time and give you a great answer when someone asks you “are you working with an agent?”

- Jen Ross

Real Estate Agent, Upper End Properties