San Diego Home Buyers/Sellers – Need To Take Caution With Internet CMA Reports!

Posted on April 5, 2007. Filed under: Home Buyers, Home Sellers |

Undeniably, the Internet provides a vast array of tools and benefits for home buyers, home sellers and Real Estate Agents.  Increased listing exposure for sellers.  For buyers, it is all about the education process and saving time “previewing” homes you have never set foot inside before (and may not wish to set foot in!) by viewing home listings from the comfort of your own (current) home! 

However, there are a few services I would proceed using extreme caution.  There are various websites out there that are rapidly rising and have massive Internet Ads and even Television Ads (I will not mention those specific names) that are offering various services to home buyers and home sellers.  One of their services, the one which I will base this entire topic on, is offering a ”Comparative Market Analysis Report” (CMA Report).  

A CMA Report is a very important report.  It is crucial to the home buying and selling process.  This report is basically a list of compiled data which includes home “comparables”.  I have inserted a screen shot image of a CMA Report below, which can be clicked on to expand to its full-size.  This report shows home buyers and sellers several of the most recent home sales in a selected neighborhood or location.  The CMA is commonly used by REALTORS® and has been for a very long time, with good reason. 

Comparative Market Analysis (CMA) Report Sample Screen Shot

The CMA report is formatted as a table and will include data such as home addresses, number of bedrooms, square footage, listing prices, market time, sold dates.  So as you can imagine, this is incredibly necessary information for home sellers to have.  Seeing what other homes have sold for in the area coupled with the length of market time is a crucial component to deciding how to correctly price a home for sale.  It is used when REALTORS® let home owners know their homes’ current worth in today’s market.  It is of course just as important of a resource for home buyers as they are deciding on an offer price for their first home or their dream home.  Obtaining a correct CMA Report is crucial.  It can mean the difference of selling and moving on time.  It can mean an accepted offer on the home of your dreams.

Now.  As far as many of these websites.  The “beef” that I have with them is this.  They do not always provide the best data.  What I mean by this is: they do not always use the best “comparable homes” in their compiled data.  Sure, the address, the sold date, the market time, etc. may all be correct.  However, that does no good, unless you are 120% sure that you are basing your analysis off of what I like to call “true comparables”. 

I believe most of these reports are machine generated, and that is where the problem lies.  Even if there is a representative in charge, there is no way to hand select every Internet CMA request.  Even if they could, they would not be “local area experts” so how in the world can they separate the good or “true comparables” from the bad? 

I went into many of these sites first hand, and I plugged in an address to use as my home address (I used many of my listing addresses as examples, because I knew the neighborhoods and homes incredibly well).  I then request a CMA Report as if I were a home owner/seller wanting to get an idea as to what my home’s value is.  What I found, way more times than I would like to mention, is that the data suggested to me was incredibly inaccurate. 

Inaccurate for various reasons.  Sometimes it was due to lack of the most current comparables in today’s market, which made for bad comparables.  Or the comparables were bad simply because the type of some of the homes generated on the report was different in some way, and therefore would not be a “true comparable”.  Or the home comparables drawn up and used were in the same zip code but a very different neighborhood within that region, which equals even more “bad comparables”.  Of course, in Real Estate, everyone knows location is everything.  Location, Location, Location.  Computer generated CMA reports cannot differentiate whether one house is located near a landfill or the ocean (I know, that’s extreme!).  It also cannot tell whether a house that was sold was priced correctly or not by that previous listing agent.  Only a live human being (who also is a trained, licensed REALTOR® and an expert in the field) can ”weed out” and accurately tell you about the recent sold comparables in your market area.  That is really what it seems to come down to, unless these computer systems get “smarter”.  But, I have a feeling we are far from that day. 

No matter how one looks at it, incorrect data means incorrect analysis and that leads to incorrect pricing in ones’ mind, which can end up being very costly (in both time and money).  Due to incorrect data out there, many people may have inflated ideas of what their home is worth and will therefore stay on the market too long, because they did not know their true home value.  Others may be underpriced and lose thousands or tens of thousands that they could have gained if they had the right information early on.  Buyers may get the house they put an offer on, but little do they know, they could have gotten it for much, much less.  Some Buyers will have their offers rejected and will lose their dream home, which would then be sold to another buyer, because of a too low offer.  In any of these example scenarios, people can lose big due to incorrect pricing.  Pricing is everything.  Knowledge is key. 

Real Estate, for most of us, is the largest investment of our lives.  Why take any chances.  I am not suggesting to run away from those websites.  However, I would strongly recommend contacting an excellent local REALTOR® for their opinion.  Hear what they have to say.  It should be offered as a free service to you.  Tell them you already have a CMA Report, but are interested in a second opinion.  Get their opinion on the accuracy level of that original report — and then go from there. 

If you are a home owner, home seller or home buyer in San Diego, CA that would like to Request a free CMA Report, you can visit my site and easily submit a request.  Typical report turn-around time is within 24-48 hrs.  Enjoy! – Visit my Blog’s Homepage!


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