Hi,

I am new to the forum and on my intro I explained how I am just getting back into real estate. Below is my dilemma.

You see on these real estate TV shows like Selling New York, Sell my House, etc. and they always seems to have a very narrowed down price of what they think a house should sell for. My question is, what program are they using to get this accurate? Here in Houston we have Tempo in which you can utilize the CMA Wizard to form comps, but what I don't like about it is that it doesn't seem to give the chance to be real accurate on how to come to a price for a house.

Is there some book/software I am missing out on or I don't know about? How can a realtor use their best judgment to price things in a house from granite, to hardwood floors, to fixtures without overpricing or underpricing? I don't understand how a realtor can price a home without knowing the exact money return these things offer to each house.

I am getting ready to sell my house and my home is 2535 sq ft but yet, 840 sq ft is natural maple hardwood floors. I am trying to figure out exactly how to price my return on these floors.

I don't ever want to go to a clients house for a listing and not create a reputable listing price because I don't understand how to price valuable objects done to the home.

I would appreciate any help because I plan on getting totally back in to real estate and I don't want to advertise until I completely understand this method. When I signed on at KW initially, they didn't even teach or mention anything about comps. It's almost like you are thrown to the wolves in the beginning.

I noticed there were plenty of views for my topic but no one wanted to pitch in and help answer my question.

This is the point I am making about this topic. Is it TABOO or does no other agent ever want to help out another agent out when it comes to this topic? When I first became an agent, not one agent nor the broker spoke of CMAs or preparing a CMA. It's like no one wants to give their expertise as to how you can narrow the pricing of a house accurately.

I really would appreciate it if another agent would give advice as to how they come to the conclusion on how they arrive at pricing for their buyers and sellers. Again, as an agent, I have the luxury of using TEMPO through our MLS which offers a CMA Wizard, but it still doesn't offer the opportunity to price items to to create an accurate price for a house. Who decides what return a seller should get for granite or hardwood floors, etc.?

I really would appreciate if someone would offer help. If no one wants to offer help here my email is stiglerrealty@sbcglobal.net.

Thank You

When you compare the prices of upgraded homes to the homes that are not, you will find the price difference between the two.

For example: If ordinary homes sell for $200,000 and the upgraded homes sell for $230,000, the difference is $30,000 - so I'd price the subject at $225,000 because we're in a declining market and list it for $227,000.

Thank you so much for the info. I've even asked several agents associated with my real estate firm and you would swear I was asking a weird question.

I think the word "accurate" might throw some people.

CMAs, just like BPOs, are subjective estimates. There is no such thing as an accurate BPO or an accurate CMA . . . . they are just an opinion of what a practitioner, in a certain market territory, believes a property will command in the current economic marketplace.

I now always evaluate the motives or the objectives of the requesting entity. What do they "want" to hear? Buyers will always remember the lowest price they ever heard, while Sellers will always remember the highest value they ever heard.

We can dance around all of the pseudo-scientific methodologies that can be employed to establish a value . . . . but in the end, we will do what is required to either satisfy the needs of the party paying for the BPO . . . . or meet some minimum pre-conceived, (and emotionally based) thought that a Seller has regarding what his/her property is worth, all in an effort to allow us to get the Listing.

We will only know how "accurate" a CMA or BPO was AFTER a property has actually sold and we can then look back and see whether the practitioner making the projection of some future value was sufficiently clairvoyant to guess closest to what some future Buyer might pay . . . . but at that stage, there is no prize for having been "most accurate".

I have done many really really accurate CMAs; but they didn't receive recognition because I didn't get the Listing; so that didn't help much in my pocketbook . . . . and then, who cares?

The biggest problem with "upgrades" is unless it's a total new kitchen for instance, in this market we are not seeing that add a whole lot to the purchase price. Most homes sell for what the average house is selling for in that neighborhood. It's just the upgraded ones sell faster.

So if for instance you think you are going to get $10,000 more because you put in hardwood as compared to a comp with carpet I think you are mistaken.

Buyers look at upgrades as "oh goody someone already did that, but I'm not paying extra for it". Most buyers think they can do the same thing for less than the price increase. Sellers on the other hand feel their upgrades are worth the total cost of installing them. Both are wrong.

It sounds like you are looking to substitute knowledge of the market with software. Granite and hardwood are nice upgrades, but in a particular neighborhood or building they have little or no value. At the same time in a different neighborhood or building not having them could be a negative. In a neighborhood where most of the homes have Oak hardwood, cherry or birch can add value. In a neighborhood where most of the homes have vinyl, cherry or birch would probably have no higher value than oak.

Software has come a long way, but I haven't seen one yet that automatically adjusts the value for hot pink walls.

There are plenty of software programs available to help you narrow down a price range, your MLS has a simple CMA built in, but I have yet to find a good substitution for actually getting into the houses and seeing what is up. When determining value there are too many variables that the MLS doesn't track. It won't take too long before you will see one of those strange listings that has all the bells and whistles and an unworkable floor-plan. According to the listing all the right rooms and all the right upgrades are there, but the value just isn't.

As a new agent you won't be able to view all the closed comps, but take some time to preview the ones on the market and you will have a pretty good idea whats up in a given area. I can't tell you how many times I have had to tell a seller that they spent way too much money upgrading their home for the area. Do yourself a favor, as your business grows even if you chose not to work with buyers, keep previewing homes in your marketplace.

I think the OP first could have learned to search around the forum and read. I know it's a real pain doing that, but, that's also where you learn alot too, instead of asking the same question that's surely in this forum somewhere.

I believe in certain neighborhoods, upgrades do matter, but, as another poster said, just because you spent $10,000 on hardwood floors, you're most likely NOT going to have $10,000 in added financial value to the home, unless two similar homes recently sold - one with hardwoods, one without. If that's the only significant difference between the two - there's your value for hardwoods.

A $5,000 gourmet stove/oven in a $100,000 home does not make it worth $5,000 more as it's totally out of place with the $500 ranges in the neighborhood.

It's experience that's going to give you some idea of what value to place on something. I would give a property more value with upgrades than one without, but the neighborhood itself plays a tremendous part also.

Wait til you get to where you can't find ANY comparables and you're searching out 8 miles, then you can start to get nervous....

I want to thank everyone that has given me some advice. I do have a clear understanding now about preparing CMA.

To VABroker, I only posted in the Agents/Broker section because I figured this would be the area where the agents and brokers have experience, so I would get a more precise answer. The other tabs were for new and aspiring agents, etc. I just thought this would be the section to start researching. Plus, I read so many posts in all the other areas on this forum and could not find anything with my topic,(preparing a CMA) so that's also why I posted in the agents/brokers section.

Sorry,

Julia

There are definately quantifyable values used by appraisers. Below are some to consider, remember, values differ from location to location.

Additional GLAAG = $80 per SF
Additional GLABG = $50 per SF
Add'l Bedrooms = $2000 each
Full Baths = $3000
Half Baths = $1500
Fireplace = +/- $3000
Private Well or Septic $3000 to $5000 each
Decking = $1000 per 100 SF
Garage Stalls = $6000 per Stall
Acreage $2000 per Acre, or 50¢ per SF
Flood Zone = $20,000
Year of Construction = $800 per Year
Private Road = $5000 per 100 Running Ft
Quality of View = +/- $5000
Quality of Construction = +/- $10,000
Architectural Appeal = $15,000
Functional Utility = +/- $10,000

I meant to slip in there to look at local, written appraisals if the OP ever has the chance. That gives you some idea of the adjustments, but, appraisals may all still have different adjustments, but they shouldn't vary too much in the same local area.

Wasn't 'jumping' on you about 'searching' so much except that when you 'search' you might find a good number of reasonable responses, although you may have to search through several pages of posts to find them (the downside to searching).

I just searched 'Shafran' a little while ago and nothing came up so I started a post.

Thank you for the very detailed info. I will print this out and use it as part of info.

Wish you good luck!