Comparative Market Analsysis (CMA)

Third, as a filter for your map search, you'll select "Sold" homes, not pending or active listings. Listed homes can be priced for dreamers and may end up being forced to reduce the price multiple times until supply and demand determine the actual true fair market value--the sold price.

Fourth, you'll add more filters to compare only those homes that are as similar as possible to the subject home. Obviously, compare apples with apples. If the subject home is 3 bedroom, 2 bath, 2,000 square feet, single level, built in 2018, situated on a peaceful one acre lot with a mountain view, you're not going to include two story homes that are much older and on 10 acres with a barn. The quality or accuracy of your CMA and the predictive price you assign to the subject property in your final self-generated report depends on the similarity of the comparable homes. Do not do what most lazy listing agents do when they are looking at "comps" in the MLS to determine your listing price, which is to grab what appear to be similar homes on the surface, but are quite different for certain reasons. If you want an accurate CMA, you're going to have to be patient and diligent to take the time and effort to carefully study listings and only after a lot of hard work will you be able to filter out homes that at first seemed similar but are not truly comparable. When it comes to value, everything in a home is a factor, including the architectural style, the quality of materials and labor, how modern the kitchen and master bedroom and master bathroom are, the type of hardwood or composite flooring or carpet, the technologies used in the home's construction, and so on.

Select your similar homes on Zillow, because that's where we're going to get the sales price history also. Go through all the filters to find comps, and you need to select the right options, including "Sold", "Price Range" (and narrow the price range to a range of values that you know your subject property will fit well within eliminating low price and high prices that no comps would be in), "No. of Bedrooms", although in a rural area you can leave the number of bathrooms blank because we don't have enough inventory to be anal retentive on how many bathrooms must be included in your comps), "Home Type" (select only "Houses" and deselect other options), and under the filter "More" you should select a few more options, including a range for the square feet, a minimum and maximum for acreage, select a home that is older but not too far back from your subject property, and at the bottom select the drop down for sold within the last 12 months, unless you have to adjust that. Don't forget to zoom in on your Zillow map to include only the area you want, and that will automatically include only the listings in the map you're looking at.

Fifth, you must have a time limit on how far back you include similar homes that sold within your radius. Certified appraisers who are doing a residential appraisal for a mortgage company have a six-month rule. In a normal market they won't go back in time to include sold properties beyond six months. That's because markets evolve and go up and down, so if you get too far away in time from the current state of the market, your math will be off and the estimated fair market value of your subject property will be off one way or the other. But six months is not an absolute rule for you. It's just a guideline. If you can't find enough comps, go back further. If the market hasn't dramatically changed either up or down, you can go back a year, more or less. For extremely unique and expensive luxury homes or big farms (or horse ranches), you may have to expand both the radius and the time you go back to find similar sales.

Once you find a truly similar property, save it as a favorite and to be safe, keep a separate numbered list including each property. You don't want to spend hours studying properties and select several and then later not be able to find them again. That would be a mini-nightmare.