Improve Your CMA Skills and Win More Listings
Wednesday, September 05, 2018
Written By: Leslie VanBurkleo

Creating an accurate Comparative Market Analysis is a highly important function in a REALTOR’s service and knowing how to adjust comparable properties for features that the subject property does or does not have will help you provide the most accurate market analysis to a potential buyer or seller. In my experience, have found that knowledge of current construction cost for additions and remodels is a key aspect in making correct pricing adjustments. Did know that most home improvements and remodels only hold one third to one half of its construction cost in resale value? In this blog, I will use the example of estimating the resale value of an inground pool on a residential property to help you better understand how to make pricing adjustments in a CMA.

The first step in understanding cost vs value is to learn the current construction cost of additions, remodels, and home improvements in your local market area. According to ImproveNet the lowest cost typically spent to add an in-ground pool in Texas is $30,000 with high-end custom pools costing as much as $135,000. The average cost spent on adding an inground pool in Texas is $55,741. If a remodel or home improvement typically holds one-third of its construction cost in resale value, this means that the average value of a pool is approximately $18,560. Calculating the value of a pool in this manner means that you must know the construction cost of the pool, as well as, the current condition of the pool. The other aspect you need to consider is the desirability of a pool in the area your subject property is located in.  For example, having a pool on your property in a lower end area may not add any value to the property at all because a pool is not a feature that the profile buyer wants in that area. So, how do you estimate the value of a pool when you have limited details about the quality and condition of the pool that is on the property? The easiest answer, that I have learned from my experience, is that the value of the pool on a property is typically 5% to 7% of the total value of the property. The fluctuation of 5% to 7% takes into consideration the demand for a pool in the area in which the subject property is located. A $350,000 property would typically have a pool on it that is valued between $17,500 and $24,500 (depending on the quality, condition, and demand for a pool in the area).

Now that we have discussed cost vs value and how to estimate the value of a remodel, addition or home improvement lets look at how to make the pricing adjustments in your CMA.

  • When adjusting the sold price of a comparable property for a feature that the subject property has but the comparable property does not have, you will add the value of that feature to the Sold Price of the comparable property as if it had that feature as well.
    • Example: if the Subject property has a pool valued at $20,000 but the Comparable property does not have a pool, you will add $20,000 to the Sold Price of the Comparable property because it would have sold for $20,000 more if it had a similar pool.
  • When adjusting the sold price of a comparable property for a feature that the comparable property has but the subject property does not have, you will subtract the value of that feature from the Sold Price of the comparable property as if it did not have that feature.
    • Example: if the Comparable property has a pool valued at $20,000 but the Subject property does not have a pool at all, you will subtract $20,000 from the Sold Price of the Comparable Property because it would have sold for $20,000 less if it did not have a pool, like the subject property.

I invite you to attend my class, Creating a Comprehensive CMA in Matrix, for an in-depth learning experience in creating CMAs for your buyers and sellers.

In the meantime, here is a brief tutorial on utilizing the pricing Adjustment screen in Matrix:



About the Author:
Leslie is an experienced real estate trainer and director of agent development with a demonstrated history of providing exceptional value to real estate professionals since 2006. She specializes in Multiple Listing Service, REALTOR Continuing Education, Professional Development, and Agent Coaching. She can be contacted at leslie@wcrealtors.org or 512.255.6211.

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