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Class for a CMA

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Robert Muir

Thread Starter
Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Utah
Somehow I went and got myself talked into giving a lesson to some realtors on how to do a CMA (current market analysis). We have been having some problems, they have used: too large of homes for small homes, homes with acreage for homes with city lots, townhouse/condo to SFR, over 12 months old, etc. Then everybody wonders why the appraiser comes up with a completely different value??? :roll:

I was working on my lesson plan last night and had a thought that maybe somebody out there had an idea or two to share, or maybe a lesson plan (now that would be to much to ask for). Sometimes I think that I work/talk in a foreign language when talking to some of these agents. I even had an agent that has over 20 years of experience multi-time member of the million dollar sales club, ask me why I couldn’t use a brand new townhouse for a small older style SFR since they were the same size. I think that it took at least 3 minutes for me to pick up my jaw off the floor and slowly answer the question. 8O Since I live in a small town and know all of the agents/brokers, I don’t think that having this class will be a bad thing.

Some of things on my lesson plan are: Like property to like property. Not price to price; Acreage to acreage; Date of sale; Furnishings/No Furnishings; Current use; Highest & Best Use; Gross & Net. Basement/No basement; and of course Location, location, location.

Anyway any Idea’s out there??? The class is tonight at 1730 hrs. Should have thought about asking this site on Monday, sorry about that.

Bob
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Bob,
One of the biggest problems I see is what they call GLA. In my area (N.GA mountains) if the basement is finished, they call it GLA. It is below grade, with inferior carpet floors, and a drop tile ceiling, but has a great view out the back so the agents will call it GLA. Take a copy of the definition form the text book as a hand out.

Second, many don't know how to measure or calculate GLA. This is not taught in "real estate school". Take some of those basic square houses from your appraiser 101 class that have a garage, porch, etc. to show how to figure the areas. Many simply don't know how to multiply the areas. Hey, they are sales people, not math wizards.

At the very least, show them how to read a tax card to get the SqFt from public records. More and more MLS's are not posting the SqFt due to litigation and the agent being wayyyyy wrong. Years ago when I had sales agents working under me, we has a long training session on how to find data in the court house and tax office.

Just some thoughts.
Mell.
 

Robert Muir

Thread Starter
Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Utah
Mell

Thank you, I forgot about the GLA above grade and walk out basements. Important stuff!!! That GLA stuff just comes so naturally to us appraisers we forget that them others don’t understand it like we think they should. I will be putting that on my lesson plan and including a copy of the local tax printout from the Recorders office.

Bob
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Let us know how your class went.
M.
 

Robert Muir

Thread Starter
Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Utah
The class went good; it took about one hour and 15 minutes with all the questions. They had good questions too, ones I’m glad they asked, to help get rid of a lot of the confusion between a CMA by a realtor and an appraisal. I had 10 main items with several bullet items for each main item.
The size of the class was about 10 people, just right for questions & answers without becoming unwieldy. I didn’t want to go there and lecture, I wanted questions and interaction and you cannot do that easily with a large group. I think the response from them was good; I did not sense any dissatisfaction or confusion. We shall see on the next few listings how things go.
Below is my lesson plan. Someone may ask why #10 is at #10 and not at #1. I wanted the last thing in their minds when we ended was the GLA factor. I did not want to bury it somewhere in the middle. When we talked about the Public Records & the square footage, the Company Broker told them all that every house will be taped. "Do not use the GLA on the public record for the size." A Good Broker/Manager. I gave them a sample of my tax print out that said I had 1176 sq ft when I actually have about 1800 sq ft. A big difference in size & value, but I’m not complaining, mind you.

Class outline:
1. Like property to like property. Not price to price
a. Single family residential must be compared to single family
residential.
b. Commercial to commercial property.
2. Acreage
a. Small lot to small lot.
b. Acreage to acreage.
c. Small lot to acreage will need adjustment.
3. Date of sale
a. Date of sale for comparable is preferred in the last six months.
b. Date of sale for comparable is acceptable in the last twelve months.
c. Date of sale for comparable over 12 months, used only as
supporting comparable.
4. Furnishings or no Furnishings
a. Sales price with furnishings
b. Residential appraisals are typically without furnishings.
c. Commercial can be with or without furnishings/inventory.
5. Current use
a. Federal regulations state that the appraiser must state the current
use of the subject property. i.e., SFR, Bed & Breakfast, rental unit,
vacant land, & improved land.
b. Typically the appraisal is completed “As Is”.
c. Buyer is buying property for different use than current use.
6. Highest & Best Use
a. Federal regulations state that the appraiser must state the Highest &
Best Use of the subject property.
b. Commercial versus Residential.
7. Style
a. Ranch to Rambler.
b. Home with basement to home with basement.
c. Stucco, siding, and brick.
8. Gross & Net adjustments
a. Total amount of adjustments allowed.
b. Gross: 25% of all adjustments allowed.
c. Net: 15% of all adjustments allowed.
9. Location/View
a. Location & view do have value.
b. Positive & negative attributes must be taken into account.
10. GLA (Gross Living Area)
a. Above grade.
b. Below grade: basement, daylight basement, and walkout basement.
c. Garage, carport, shop; do not add to the square footage of the GLA.
d. Recorders Office versus measuring the home.

If you think of something that should be in there for next time (if there is a next time) please feel free to share.
Thank you,
Bob
 

Walt Kazmierczak

Freshman Member
Joined
Jan 16, 2002
Bob,
Great lesson plan and an opportunity for you to "rub elbows". One issue you have covered very well at several points in your plan, but I feel needs to be reinforced with Realtors is that the comparable "sales price:square foot living area" ratio has little to do with market value. Too often this seems to be their primary sort/search criteria when looking for comps. This approach, of course, does not factor in the other variables between the properties.
Walt
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Hey, thanks for the lesson plans. :D
I'll use that in the future. You may have just saved me a few hours of work and days of worrying.

Mell.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Good job!

The only other thing I can think of is handing out and going over the Definition of Market Value.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Would have to agree with Pam on the Definition of Market Value; other than that it appears you covered quite a bit. In my service area, it's funny to see the differences of Agents one to the other; in one area the agents always are way off in determining the GLA and in the other they're almost always right on or within a few SF; I believe it comes down to "How There Taught" when taking RE class. Second biggest problem is Finished Basement area.
Like your idea of teaching to small class size; appears you have their undivided attention; ability for a good Q/A period; and more control.

the lighter side 8)
 
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