Figuring out the value is much more than price per square foot. If it was all that mattered, Zillow’s accuracy wouldn’t suck so bad. They even show how accurate they are in the larger metropolitan areas.
I start my search with square feet. I will go about 200 sf above and below the subject property. If you get above 2000sf, you can expand the range because 200sf isn’t as important compared to a 1300sf home.
Next I will go 10 years above and below. I will keep the same number of bedrooms and bathrooms. I will search within about a mile or so. I will stay away from freeways or significant neighborhood changes.
I want 5-9 Sold properties to be similar in condition and style. Condition matters a lot. That also encompasses upgrades. If my results are too big, I will tighten or add to my parameters and vice versa if I have too few results.
There are other parameters you can use based on the style of the house and area. Schools can affect price a lot. HOA’s are loved and hated. County lines matter with taxes. Wells, sewer, bodies of water, shopping, etc. all play a part.
Now if I’m researching for a listing, I do a second search. While an appraiser will prefer to stay within a mile to decide price, buyers are looking in a much larger area. I will stretch out my search to 5-10 miles depending on the property and see what is active. I want to know what the competition is because that matters when you are trying to sell.
I did this for a rare home in my area. It was a 2000+sf home with a Master on the main. There were only two other homes in a 7 mile stretch that I had seen buyers look in. This gave us confidence to price it higher and we had exceeded our client’s expectations. If we had just stayed with the close in comparables, it would have looked.
Keep this in mind. Active listings are a hope. You don’t know if they will get an offer at that price much less settle at that price. Pendings are a dream. There could have been several reasons why that price will not be the final price but at least it’s Pending.
Solds are reality. It’s what the appraisers want to use and that is what the public trusts.
There are tools that your MLS likely has to put together the CMA in a nice PDF. CloudCMA is a tool our team uses. When I was solo I would make the MLS CMA but take all of the MLS sheets and go one by one through those. I found that to be the most effective. To each their own style.
I hope this helps. In the future I plan to do a screencast of me making a CMA.
