How much is my home worth? (AVM vs. CMA) - YouTube

Picture this. You're a homeowner and you want to  know how much your home is worth. So you go to a  

website like Zillow or Redfin or Realtor.com  or Homes.com or a million other websites  

and it asks you to type in your address and  click the button and uh the computer thinks  

and it comes up with one of three things.  Comes up with a specific value for your home,  

it comes up with a range of values, or it says  that it can't determine what the price of your  

home is and that you need to speak to somebody  more specifically. So this is called an AVM,  

an automated valuation model. So is this the  right answer? Usually not. So let's take a  

couple minutes and dive into how to get the  right answer for how much your home is worth.

Hi, my name is Mark Karten with  Karten Real Estate Services in Queens,  

New York and as i just said, this automated  valuation model is good for an "ish."  

It's not something that you should feel  with any confidence that your home's  

value is. Now -- Queens specifically -- if you've  got a condo or a co-op, it might be a little bit  

closer in value than a single, two, three, four  family home -- maybe, okay? Again you need to  

speak to somebody real -- a licensed real  estate agent or broker -- who is going to do  

what's called a CMA. So a CMA is a "Comparative  Market Analysis" and what they're going to do  

is they're going to take the specific details of  your home, which is known as the subject property,  

and they're going to compare it to recently sold  homes in your neighborhood -- sounds familiar,  

like the AVM, except it's going to be very  detailed, okay? Because public records only  

give you so much information and they're very  basic details that's known to the public, the  

inside of your house is not known. What upgrades  you've made, what the condition of your home is,  

especially if you have a semi-attached or an  attached home, right, two, three, four family home  

is going to be vastly different than a condo or  co-op, which is really, the only difference in a  

condo and co-op is the size, right, the  floor plan, how many bedrooms bathrooms  

and what floor you're on and the view. So before we  ever get into condition and what beautiful things  

you've done inside your home. So this really is  going to go now more to homes than condos and  

co-ops, but it all applies. Now the bottom bottom  reason for why we need to do a CMA is because  

ultimately if you do decide to sell we have to be  prepared, be prepared for a buyer who's getting a  

mortgage and a buyer who is getting a mortgage is  going to need an appraisal from the bank. Now that  

appraisal is what gives the bank the confidence  to issue a mortgage commitment letter so that  

they can close, all right, and that you can get your  money. So that's the whole reason for all of this,  

bottom line, but in between then, it's going to  market and we want to go to market with the confidence  

that the price is correct, that you're going to  attract the most amount of potential buyers, so  

that you can get multiple offers which raise  the final sales price of your home, that's  

still within appraised values, hopefully -- could  be a little higher -- the market's still going up  

as we come into Spring 2022, but it's based on data,  it's based on facts, all right. Selling your home  

is a very emotional process and so there's a lot  of emotion into all the things that we've put into  

our home and we've experienced and we know how  many tens of thousands of dollars we paid for the  

granite and the pool and the deck and all those  things that are important but they only translate  

into so much value. So let's take a couple of  minutes and let me just explain what a CMA does.  

So again your home is the subject property  we're going to compare, so we want a minimum  

of sold properties, not your neighbor's house  that just went on the market. It doesn't matter  

what they priced it at, it doesn't reflect your  value, it reflects what they are for competition  

which is going to be helpful when we list your  home to sell, but it doesn't have any bearing on  

the value of your home until their home closes,  till it's sold, all right, then it becomes a comp.  

So um we're looking at general information  like lot size uh the square footage of your lot  

the square footage of your home, how many stories  it is, the age, uh how many bedrooms and bathrooms  

-- all of these things. Is it in a residential area  versus residential turning into commercial? Is it  

uh what's called a unicorn -- the only home of  its kind? So there are no like comps, so that  

makes it a little bit harder. So is there  a basement? How many garages are there?  

All of these things factor into the value of your  home. So I'm not going to get into the details of  

the CMA beyond that, but just suffice it to say  there's a lot of things that are variables. Now  

when it comes to square footage both for lot size  and for the interior square footage of your home,  

the most, uh, that an appraiser will go is usually  20 percent. They're going to want to look for 10 percent  

within your same neighborhood, within homes  that have sold within the last 30, 60, 90  

days -- they might go out a little bit further in  time, if they have to, uh but they'd rather not,  

The bank wants the confidence of apples-to-apples,  like-to-like homes, all right. When you're talking  

about -- again especially in Queens, multi-family  homes -- two, three, four family homes -- now, in an  

appraisal, it gets really detailed, because these  are residential income-producing properties,  

and so, that is a part of the calculation as well. So if you have a two-family home and it's all  

filled by family members -- in other words, you're  not collecting rent from anybody -- then that's  

different than a two-family home that's totally  rented out and that is collecting rent. So again  

these are different models and you're also going  to limit your pool if it's totally rented out  

because, if somebody's looking for their own  personal residence, then that's not an option,  

right, if there's tenants in there who are not  leaving. So again these are the details as to  

what we're looking for and to why that automated  valuation model -- the Zillows and the Redfins and the  

Realtor.com is not the answer. So what this all  translates to, is that an agent or a broker will  

want to have a conversation with you, at the very  minimum on the phone, to ask you a bunch of details  

and especially what the condition is of your  home, uh, what your improvements are, renovations, uh  

repairs, uh things that are deferred maintenance.  Did you replace the roof recently, the hot water  

heater, the boiler, furnace? All of those things.  Are there issues that we have to contend with?  

But this all gives us a better idea -- but again  speaking to an agent or broker over the phone  

is not going to give you a firm number, uh,  they need to see the home in person. So my best  

analogy is that if you had a piece of jewelry. So I  could tell you "ish" what it's worth, but until I see  

it in person, and look at it through a jeweler's  loupe, uh if it's a diamond, then I need to see the  

imperfections and that's going to give me a much  better idea of what the value is. okay? So that  

is uh overall, how we're going to get to the number,  and what stock you should put into these numbers  

that come up on your screen, that are really not  based in reality okay? When an agent comes into  

a a potential seller's home, um there's usually  different, uh concerns, that I'll go over now. So one  

is that the AVM says -- the Zillow, Redfin, Realtor.com --  says my home is worth more. So the agent's going to  

show you, well I don't know what they used, but  here's the reality, because this is going to be  

updated, and in Queens, we're going to use the  MLS. We're going to use public records which  

is ACRIS. We're going to use StreetEasy because  some homes don't go on the MLS and they only go  

through StreetEasy because some agencies don't  use the MLS. So it's a -- it's a bunch of different  

data sets that we use to get the most complete  information. Then the agent's going to show you the  

pictures and the condition of the homes that we're  comparing to, and then we're going to -- remember  

you're the subject property -- we're going to see if  the homes are superior to yours, inferior to yours,  

or if they're equal to yours and that will also  weigh on the value of your home. So once we're  

on the same page, we're looking at the same  data, now we determine how to price the home.  

So there's a bunch of, uh different ways  that homeowners want to approach this.  

So one is that they're talking to multiple  agents and let's just say that I say your home  

is worth a million, okay? That we should  list the home at a million dollars, and you say,  

"Another agent said it's worth $1,250,000. Why can't we list it for a $1,250,000?  

We can, but the goal is to get in and out of the  market as soon as possible. So there's very limited  

inventory, buyers are very savvy, they have access  to the same information that you do. They know the  

neighborhoods, they're seeing what's comparable,  and if you list a home that's a million dollars  

the the -- really the value of it, as it should be -- for 1.250, they're not even going to bother to see  

your home. So you've lost them, potentially. Because  they're saying, these people are not realistic, okay?  

So that's the last thing that we want. Better to  have everybody come to see your home at a million  

dollars and then to have competition and drive the  price up. Second of all, you only have, like I said,  

a limited window, because within the first 30 days,  you're going to see by the amount of traffic, by  

the amount of offers that you receive, whether  your number is realistic and after that 30 days  

your chances of selling without a price reduction  is low, and as soon as you make a price reduction,  

it's waving that white flag and you say  "I surrender. I don't know what I want"  

okay, and the price is going to come down -- or you're  going to be steadfast and say "I know my house is  

worth this and it's not going to sell." So some  agents may say they'll list it higher because  

they know you're going to have to lower the price.  So in the business, that's called "buying a listing."  

You don't want to have your listing bought, okay?  So go by the facts, always ask any agent you're  

talking to, "Show me the facts of what has sold  and what you would show an appraiser if they  

priced my home lower, okay. It's simple, just do that  across the board. Um so uh your upgrades, so if you  

um did all these wonderful things to your home,  the mindset should be "I did those things for  

myself." Now we're talking about carpet and hardwood  floors and paint and granite, all those things you  

did for yourself. You shouldn't be doing that  to raise the value of your home uh because  

it's really it doesn't translate. Why? Because  every buyer has a different personal preference.  

So when you bought the home you probably changed  the carpet to hardwood floor or you just changed  

the carpet to a different color -- their personal  taste was different. You took down the wallpaper,  

you replaced the Formica countertop with  granite. So all of those things right down  

to the appliances, everything you did you did  for yourself, so it's not going to translate  

into, "I put in a hundred thousand dollars, I want a  hundred thousand dollars back" -- usually not going to  

happen. I say this with an asterisk and, in general,  let me see your house and then we'll talk about  

the specifics, okay. Um, my neighbor's home sold for  more -- so we'll look into that. We'll take a look at -- 

again, does your neighbor's home fall within those  parameters? So it's age, condition. You're a single  

family home, they're a two-family home, they're not  the same thing, so it's not apples-to-apples, it's  

apples-to-watermelon. They're both fruit, they're  right on the stand, right next to one another but  

they're not apples-to-apples, okay. So we have to  look at things without emotion and just from  

a data set, unfortunately. Um and then finally,  what some people want to do is test the market  

and if anything this market does not need  testing. The market is crazy, so we want to price  

the home at fair market value and get it out to  everyone. So I will -- this is for another video -- but,  

if a home sells so easily, what do you need a real  estate agent for you can sell it yourself or for  

sale by owner. Save the commission, right, I can do  it myself. Nobody knows the home better than I do,  

so I'll just do what real estate agents do, I can  do the same thing, and you can, and a lot of people  

do that, but the point is you still want to price  it right because the buyer pool knows exactly what  

pricing should be and they're not going to overpay  for a home. Nobody's going to overpay for a home.  

So, that's the big takeaway -- it's price your home  correctly, use market data, compare apples-to-apples  

and enlist a professional, whether you ultimately  choose to go with them, but enlist them to get  

their impressions of what the data set is, for  your home today, okay, and that's going to change  

in 30, 60, 90 days, all right, so if you're not going  to list for a while, you're going to want this all  

done again, so to see where the market's gone and  maybe your home's increased in value since then.  

So this is a lot of information, thanks for hanging  in there and if you have any questions feel free  

to reach out to me, I'll be happy to answer  them. Best of luck with the sale of your home.