This week, probably like most of you, was "back to work" week. It was a pleasant break from Christmas through New Year's but it felt really good to get back into the swing of things again. So far the new year has started well and busy. I've had people walk in the office, always a good sign, people calling for comparative market analysis (more on this in a minute) and people calling to set up time to look at properties.
I frequently get asked what a comparative market analysis (CMA) is. I often get asked to do them even though those doing the asking don't know that's what they are asking for. Often I'm asked to do an "appraisal" of a property, sometimes for tax purposes, sometimes just because someone wants to know what their property is worth in today's market. Let me be clear here - an appraisal is a formal opinion of value from a professional appraiser. A CMA is a real estate agent's opinion of what a property will sell for in the current market. If you get a formal appraisal you will pay the professional for her or his opinion. If you ask me to do a CMA I will not charge you. The two do not always agree and only the formal appraisal is used by lenders.
What is it that I will do and what am I looking for? I will want to tour your property and will ask you a lot of questions. If you have a home on the property I will want to take a look at everything, just as a potential buyer would. I'll want to know when you bought it, what you paid for it, what improvements you've made, what makes the property special - do you have an Ozone-ator, a hot tub, a pool, a spa, solar panels, etc. What are the views? What are the neighbors like? I might take some photographs to jog my memory when I do my comparisons; also, if you've asked me to list your property for sale and I'm trying to help you set the asking (listing) price, I'll probably want to go ahead and take all of my photos that day so I can input it all into the MLS as soon as we're ready to go.
The next step is for me to go back to my office and look up comparative properties. I'll look for current properties for sale, properties that have sold (ideally in the past six months, but given how slow things have been, I might go back a year or so), and properties that have expired from the market. I look at active listings to see what people are asking for similar properties right now. I look at expired listings because this tells me what is too much to ask - most properties that don't sell are overpriced. Finally, the best indicator of what a property is worth is what someone was willing to pay to buy a similar property and the sold comparatives will hold the greatest weight in my comparison of value.
Once all of this is done I will prepare a written report indicating what I found and stating a price or a price range that I would list the property for sale at. At this point, the information can satisfy curiousity, satisfy an accountant or help the owner set an asking price to get the property sold.
If you are curious what your property price your property is currently marketable at, please don't hesitate to contact me. I'm happy to visit you and help answer these questions - even if you aren't planning to list your property for sale right now. It's good experience for me and I enjoy the work.
On a side note, there is a Mendocino Trail Symposium this weekend sponsored by the Mendocino Land Trust. There are several hikes, a water tour (kayaks), a bike ride and a horseback ride in the morning, followed by an open house from noon to 5pm at Larsen Hall. The open house includes several speakers on various aspects of local trails and it's followed by a social gathering at the North Coast Brewery at 5pm. The link to this is http://www.mendocinolandtrust.org/?Coastal_Trail:Mendocino_Trail_Symposium. I am planning to participate in the 9:30am to 11:30am walk around the former Georgia-Pacific Mill Site. It should be fun and interesting - I hope to see you there!