Do-It-Yourself Comparative Market Analysis


The ‘comparative market analysis,’ or CMA, is the old standby marketing tool for agents trying to win listings.  The agents try to demonstrate the value they bring to the transaction by pulling supposedly proprietary sales numbers from databases run by their associations and the multiple listing service, to assemble a set of recent and pending home sales that can provide context for pricing your house.

That assumes, of course, that the data the agents are using is accurate. That assumption is being severely tested. In midsummer 2011, the Chicago Tribune broke a story that statistics generated by the Illinois Association of Realtors were off by 8% and more. It gets worse: the statistics erroneously indicated a major improvement in sales and prices in the City of Chicago. Corrections will reach back three years.

And the National Association of Realtors, finally rising to challenges to its own methodology, is scheduled to release its own revisions in late summer 2011.  Industry critics believe that the NAR’s flawed bean counting could have inflated the volume of home sales by as much as 20%. Overstatements of that scope, of course, distort prices because agents pressure homeowners to drop prices when houses don’t sell promptly. If buyers’ interest in your house is lagging compared to market norms as indicated by agents’ statistics, your  agent will use that ‘evidence’ to pressure you to cut your price, trim your equity recapture, and close a deal.

Here are five reliable sources of home pricing trends and data that you can use to construct a sturdy comparative market analysis.

Federal Housing Finance Agency – This little-known website has two priceless tools, both drawing from home sale data pulled from federally insured loan programs (that is, mortgages backed by the Federal Housing Administration, Fannie Mae and Freddie Mac. That’s the vast majority of mortgages made each year.).

The FHFA’s House Price Index shows the home value trends for metropolitan areas from Akron (OH) to Williamsport (PA).  Use the trend to see where values are headed in your area: up, down or nowhere.  This shows you the momentum of your local market, which helps you know how to pace your expectations.

The FHFA’s House Price Calculator lets you plug in the purchase price for a house in any metro area; the calculator applies FHFA index to that house and serves up the likely market value of that house. Of course, this does not include the value added by improvements or subtracted by a distress sale situation.

Local property tax records – Look up – in person or online – the most recent sale price of the houses most like yours in your neighborhood. (Most databases let you search by street address.)  Plug those sale prices into the FHFA’s House Price Calculator to come up with a comparative market analysis and map of values for houses near yours.

Local building permit information – Look up – in person or online – the building permit information for nearby houses that you think are similar to yours. This will help you peer inside your neighbors’ houses and pinpoint exactly what they’ve done to improve their properties. (This assumes, of course, that your neighbors got building permits for their projects.)  You will have to visit the house to see what kinds of fixtures and finishes your neighbors chose, but the permit history for each house will reveal the big-ticket improvements that support major leaps in value, such as bathroom additions.

FNC  – FNC collects data about the changes made to each house (improvements, for example) and blends that with current sales data to produce indices of home value for major metro areas – far more than the 20 covered by the Case-Schiller Index.  (Click through the latest press release to see the most current data.)

Organize your data in a spreadsheet to identify the key trends for your neighborhood. You now have a constellation of values and trends that can help you frame a realistic market value for your own home.

Use the Pricing Guide to put your done-it-myself comparable market analysis in the context of selling or buying a house. And while a full-fledged appraisal is always the final word in pricing a home, the Real Time Pricing Report draws on much of the data used by appraisers for a customized, customizable report for only $40.