Why the Need for a Comparative Market Analysis

CMA is real estate shorthand for "Comparative Market Analysis". A CMA is a report prepared by a real estate agent providing data comparing your property to similar properties in the marketplace.

The first thing an agent will need to do to provide you with a CMA is to inspect your property. Generally, this inspection won't be overly detailed (she or he is not going to crawl under the house to examine the foundation), nor does the house need to be totally cleaned up and ready for an open house. It should be in such a condition that the agent will be able to make an accurate assessment of its condition and worth. 

If you plan to make changes before selling, inform the agent at this time.

The next step is for the agent to obtain data on comparable properties. This data is usually available through MLS (Multiple Listing Service), but a qualified agent will also know of properties that are on the market or have sold without being part of the MLS. This will give the agent an idea how much your property is worth in the current market. Please note that the CMA is not an appraisal. An appraisal must be performed by a licensed appraiser.

The CMA process takes place before your home is listed for sale. This is a good assessment of what your house could potentially sell for.

CMAs are not only for prospective sellers. Buyers should consider requesting a CMA for properties they are seriously looking at to determine whether the asking price is a true reflection of the current market. Owners who are upgrading or remodeling can benefit from a CMA when it's used to see if the intended changes will "over-improve" their property compared to others in the neighborhood.

How to approach your home inspection

June and Fred Smith were diligent about getting their home ready for sale. They ordered a pre-sale termite inspection report. The report revealed that their large rear deck was dry-rot infested, so they replaced it before putting their home on the market.

The Smiths also called a reputable roofer to examine the roof and issue a report on its condition. The roofer felt that the roof was on its last legs and that it should be replaced. The Smith's didn't want buyers to be put off by a bad roof, so they had the roof replaced and the exterior painted before they marketed the home.

The Smith's home was attractive, well-maintained and priced right for the market. It received multiple offers the first week it was listed for sale.

But the buyers' inspection report indicated that the house was in serious need of drainage work. According to a drainage contractor, the job would cost in excess of $20,000. Fred Smith was particularly distraught because he'd paid to have corrective drainage work done several years ago.

First-Time Tip: If you get an alarming inspection report on a home you're buying or selling, don't panic. Until you see the whole picture clearly, you're not in a position to determine whether you have a major problem to deal with or not.

What happened to the Smiths is typical of what can happen over time with older homes. The drainage work that was completed years ago was probably adequate at the time. But since then, there had been unprecedented rains in the area, which caused flooding in many basements. Drainage technology had advanced. New technology can be more expensive but often does a better job.

The Smiths considered calling in other drainage experts to see if the work could be done for less. After studying the buyers' inspection report, the contractor's proposal and the buyers' offer to split the cost of the drainage work 50-50 with the sellers, the Smiths concluded that they had a fair deal.

The solution is not always this easy, especially when contractors can't agree. Keep in mind that there is an element of subjectivity involved in the inspection process. For example, two contractors might disagree on the remedy for a dry-rotted window: one calling for repair and the other for replacement.

Recently, one roofer recommended a total roof replacement for a cost of $6,000. A second roofer disagreed. His report said that the roof should last another three to four years if the owner did $800 of maintenance work. Based on the two reports, the buyers and sellers were able to negotiate a satisfactory monetary solution to the problem for an amount that was between the two estimates.

It's problematic when inspectors are wrong. But it happens. Inspectors are only human. Here is another example: A home inspector looked at a house and issued a report condemning the furnace, which he said needed to be replaced.

The sellers called in a heating contractor who declared that the furnace was fit and that it did not need to be replaced.

The buyers were unsure about the furnace, given the difference of opinions. The seller called in a representative from the local gas company. The buyers knew that the gas company representative would have to shut the furnace down if it was dangerous. He found nothing wrong with the furnace, and the buyers were satisfied.

In Closing: Sometimes finding the right expert to give an opinion on a suspected house problem is the answer, but it is always good to get two opinions.

Featured Home by Chris Tuite

Looking to move to Boston?  How about this stunning residence in prominent Harbor Towers......Located on Boston's Waterfront this home sits on the Rose Kennedy Green way and only a minutes walk to the Financial District.  Boston real estate inventory is at an all time low, so don't wait to make and appointment to view this spectacular condominium.

$1,829,000.00

This stunning 2.5 bedroom home has been renovated with little expense spared. Custom coffered ceilings, artfully designed built-ins. This residence flows effortlessly from room to room. Large, open custom kitchen with granite & top of the line appliances. Absolutely the most dazzling skyline views in the city while still offering a calming view of Boston's inner harbor. This home also offers a den with full kitchen and full bath. Perfect hideaway for either spouse or visiting guests.

Boston Housing Market, Low Inventory

Below, see a recent article in Boston.com regarding the housing market in Boston.  I have been selling real estate in Boston for 20 years and have never seen the amount of home for sale this low. Currently there are only 405 active homes for sale in between Back Bay, Beacon Hill, South End, Midtown, South End, North End, Waterfront, Charlestown, and Seaport.

Sales of Condominiums, Single families, and Multi families are up from 1,422 units sold to 1,716 YTD.

The number of home for sales in Greater Boston is down significantly, falling more than 20 percent over the past year, a new report by Zillow finds.
And the biggest shortage is among lower-priced homes, with inventory for the bottom tier of homes for sale in the Boston area dropping 21.4 percent over the past year. That's followed by a 20.3 percent drop inventory drop in middle-tier homes and a 19.1 percent drop in the number of high-end homes available for sale, Zillow reports.
The drop in homes for sale in Greater Boston is a little higher than the national average, with a 19.4 percent decline in listings over the past year.
First-time buyers are likely to feel the crunch first given the bigger drop in inventory in the lower tier - sorry, not defined by Zillow but I'm checking.
That's particularly bad news. After all, starter homes in the Boston area are already something of a joke - it's often a choice between a fixer-upper closer in and a house in better condition beyond 495.

And things on the inventory front are likely to get worse before they get better, with home sales rebound now surging into the fall.
The number of homes put under agreement jumped 26 percent in September compared to a year before, while pending sales of condos jumped more than 48 percent, the Massachusetts Association of Realtors reported yesterday.
For buyers, there's a lot more to worry about than skimpier listings to look over.
Rising sales and falling inventory are a combination that typically leads to price increases, which we are already starting to see signs of.
And it's unlikely we will see any fresh batch of homes hit the market over the next few months - this may be the pattern until the start of the spring market.
First-time buyers, what are you seeing out there? Any starter homes, good or bad, that got your attention?

South End House Tour....A Must See

On Saturday, October 20th from 10AM-5PM the South End House Tour is being held; for the 44th year in a row! Hosted by the South End Historical Society, the goal of the event is to give all of the proceeds that are ever-so crucial to this Society for aiding in the preservation of the beautiful architecture, history and overall appearance of the South End neighborhood of Boston. Along with the Spring Ball, this is the only other event that the South End Historical Society hosts on an annual basis. All of the monetary earnings from both events, when combined, surmount to a staggering one-third of the Society’s total operating costs for the year. Thus, that is just further justification to the vast importance of this upcoming day.

Visitors and residents alike will be allowed the unique opportunity to be able to tour many of the most historical, valuable and finest kept residences that are spread throughout rowhouses all across the neighborhood. There is the availability to be a sponsor and therefore with these special tickets one will be provided with additional benefits during this occasion. Furthermore, there of course are general tickets as well for a cost of $25.

The South End is such an incredibly popular area of Boston for both living and visiting that even in a recent blog from this year we shared that it indeed was voted as the #1 neighborhood citywide. It thus goes to show that in order to earn such praise, these events and organizations dedicated to the upkeep of the area are as critical as ever.

For further information, please look to call the number below, and for purchasing tickets online, view the link at the base of this blog. Having our Flagship office here in the picturesque South End, we at Gibson Sotheby’s International Realty know how important this occasion is and we hope many of you can attend!

Housing Recovery

Interesting real estate article...Karl Case and Robert Shiller comment on the housing recovery

When it comes to predicting housing bubbles, you may get a better guess from a sociologist than an economist, said famed economists Karl Case and Robert Shiller in a rare joint presentation at the New England Mortgage Bankers Conference in Newport, R.I., this morning.

Case and Shiller discussed a new paper they have written that focuses on how beliefs about home prices do more to fuel housing bubbles than actual changes in interest rates.

For 10 years, the pair has surveyed buyers across the country about their expectations for home prices, asking how much they thought their home's value would change over the next year and how much it would change each year for the next decade.

The pair suggest that when people expect prices to rise faster than current interests rates over the coming decade, this helps drive purchases, and the differences between expectations and interest rates track more closely to the changes in sales than changes in interest rates themselves.

"It's the people who have the highest willingness to pay that drive the price," Case said. Looking back at buyer's expectations during the bubble, when people thought their houses would be worth as much as 17 percent more the next year, he said, "the only thing more astounding than people's expectations was what actually happened." 

Overall, both were tempered in their expectations for the housing market. Shiller half-jokingly said there was a 40 percent chance that housing was in recovery, while Case said he was felt housing starts were headed in the right direction and likely to cross 800,000 next month. But he also warned homebuilders to hold off on uncorking the champagne until they crossed 1,000,000.

"Cross your fingers and say a little prayer," he said. 

When it comes to predicting housing bubbles, you may get a better guess from a sociologist than an economist, said famed economists Karl Case and Robert Shiller in a rare joint presentation at the New England Mortgage Bankers Conference in Newport, R.I., this morning.

Case and Shiller discussed a new paper they have written that focuses on how beliefs about home prices do more to fuel housing bubbles than actual changes in interest rates.

For 10 years, the pair has surveyed buyers across the country about their expectations for home prices, asking how much they thought their home's value would change over the next year and how much it would change each year for the next decade.

The pair suggest that when people expect prices to rise faster than current interests rates over the coming decade, this helps drive purchases, and the differences between expectations and interest rates track more closely to the changes in sales than changes in interest rates themselves.

"It's the people who have the highest willingness to pay that drive the price," Case said. Looking back at buyer's expectations during the bubble, when people thought their houses would be worth as much as 17 percent more the next year, he said, "the only thing more astounding than people's expectations was what actually happened." 

Overall, both were tempered in their expectations for the housing market. Shiller half-jokingly said there was a 40 percent chance that housing was in recovery, while Case said he was felt housing starts were headed in the right direction and likely to cross 800,000 next month. But he also warned homebuilders to hold off on uncorking the champagne until they crossed 1,000,000.

"Cross your fingers and say a little prayer," he said.

Confidence grows in the housing market

Love to see positive press regarding the real estate market!  Thinking of buying or selling?  With low rates and qualified Buyers it makes sense for both.

"Local Realtors' confidence in the strength of the housing market is steadily improving, according to the latest monthly survey from the Massachusetts Association of Realtors (MAR).  

The group's Realtor Market Index (RMI), which measures whether agents believe the market to be stronger or weaker, has gone up for the 13th straight month compared to the year before.  In August, it measured 56.41.  Scores over 50 indicate a strengthening market. That's a vast improvement over last August's scores, when the RMI measured 21.63.

 "Regaining confidence in the market is a gradual process, but one that fortunately has been improving for 13 straight months," said 2012 MAR President Trisha McCarthy, broker at Keller Williams Realty in Newburyport in a statement. "The best way to ensure this upward trend continues is to increase the number of homes for sale. The only way that can happen is for homeowners who want to sell, but have held off, to make the decision to re-enter the market."

The vast majority of Realtors also expect further increases in home prices, with the association's Realtor Price Index (RPI) near all-time highs. The RPI measured 64.19 in August, which was up 61 percent from the August 2011 RPI of 39.92. This is the seventh straight month of year-over-year increases and the fourth straight month the RPI has been over the 60-point mark. On a month-to-month basis, the RPI was down 1.24 percent from the July 2012 RPI of 65.00.

Agents surveyed also thought that inventory levels would remain tight, with a plurality of respondents ----41 percent---saying that they thought inventory will be at the same level as today, while 37 percent thought inventory would somewhat increase over the next six months."  B&T 9.18.2012