Completing the CMA
Section objectives — Upon completion of this section, the learner will be able to:
- Reconcile three or more adjusted sale prices into a supported price range by weighting the comparables according to their similarity, recency and reliability, and explain the weighting in plain language.
- Distinguish the price range a CMA produces from a single figure, and apply the rule that the CMA presents a range and never calls its result a value.
- Apply active and pending listings, months of inventory, and the measured market trend to position a list price within the range the closed sales established.
- Evaluate a listing’s showing activity, days on market and feedback against the segment’s figures to determine when a price reduction is indicated and how far it goes.
- Identify the evidence a completed CMA presents to a seller, the questions that evidence answers, and the items the office standard calls for to be left with the seller and placed in the listing file before the listing goes to market.
A CMA that has reached the end of its adjustment grid is not finished. It contains three or more adjusted sale prices, each a separate indication of what the subject would have brought had it sold in that comparable’s place, and those indications rarely agree to the dollar. The work that remains is the work this section covers: reconciling the indications into a range, positioning a list price within the range against the listings a buyer will see beside it, and presenting the result so that the seller reaches the same conclusion the evidence did. This lesson states what a grid has to contain before that work begins.
What “done” means at the grid
A grid is complete when six things are true of it. The subject column is verified: its living area taken from the best available record (the assessor’s card, the public record, the MLS listing, builder plans or a prior appraisal) with the source noted, and any difference between sources noted rather than guessed at; described from the listing file and an inspection of the property, and rated for condition and quality on the same scale used for the comparables. Every comparable meets the selection criteria or carries a stated reason for its retention. Every adjustment has a source written beside it, a pair, an extraction from the segment’s sales, or a measured market conditions rate, and no adjustment is an assumed figure. Every column is totaled as a net adjustment, a gross adjustment and an adjusted sale price. The set has been checked for bracketing, so that the subject’s price, size and condition fall within the span of the comparables rather than beyond all of them. And any sale considered and set aside is listed with the reason, because the sale is one any later analysis of the segment will find, and the reason it was not used belongs in the file.
A grid that satisfies those six conditions is the input to reconciliation. A grid that does not is completed first, because the steps that follow assume that each adjusted price is a genuine indication and not an arithmetic artifact.
What the adjusted prices are
Each adjusted sale price answers one question: what would this comparable have sold for had it matched the subject in every respect the market pays for? Three comparables give three answers. They are called indicators because each one indicates, from a different sale, where the subject’s price falls. The grid produced those indicators. The reconciliation is the reasoning that decides which indicators to rely on most and what range they support.
What follows in this section
Reconciliation comes first: how three indicators become one range, and why the most similar sale carries the most weight rather than an equal share of an average. Then the range itself, and why the analysis never calls its result a value; positioning against the active and pending listings a buyer will see this week; months of inventory and the measured trend; the office’s policy on price reductions; the pricing conversation with the seller; the final quality check made on the analysis before the seller sees it; and the office workflow in one page.
Application
A grid with three comparables shows adjusted prices of $452,300, $466,900 and $463,900, and a note reading “average $461,000, recommend $464,900.” Before the reconciliation is considered, the grid is checked against the six conditions. The subject column shows a living area with no source noted, and the MLS listing for the subject shows a figure 180 square feet larger than the assessor’s card, with no note of the difference. Two of the adjustments carry no source. The net and gross totals are present. The subject’s living area is checked against the best available record, with the source and the difference between the records noted, and the two adjustments are sourced before anything else. The reconciliation waits, because a change in the subject’s living area will change the living area adjustment on every column and every adjusted price with it.
Summary
A completed grid contains a verified subject, comparables that meet the criteria or carry a reason, adjustments with a source beside each, totals as net, gross and adjusted price, a bracketing check, and a list of sales set aside. The adjusted prices are indicators, each a separate answer to what the subject would bring. Reconciling them into a range, positioning a list price within it, and presenting the result to the seller are the steps that complete the CMA, and each depends on the grid being finished first.