Section 5 Summary
This section carried the CMA from a completed grid to a listing on the market. The standard the office holds every analysis to at this stage is that the range follows from the weighted sales, the list price is positioned within the range against what a buyer sees this week, and the seller has followed every fact that produced the recommendation before hearing it.
From indicators to a range
A completed grid contains three or more adjusted sale prices, each an indication of what the subject would bring, and they do not agree to the dollar. The reconciliation lists them beside the facts that bear on their reliability, reads the spread, investigates any outlier, and weights the most similar sale most heavily, followed by recency and verification, while the sale that needed the most correction carries the least. The weighting is stated in words before figures. An average gives every sale an equal share and is generally used as a check, because when the best evidence sits at one end of the spread the average is pulled toward the weaker sales.
A range, never a number
The conclusion is a price range because the market’s evidence is a range: corrected sales still differ, and once the grid has been checked, the difference is largely the width of what buyers have paid. The range is narrow when the indicators cluster and wider, with the reason stated, when they do not. The list price recommendation is one figure placed within the range for a stated reason. The word “value” is reserved: the market establishes value, the appraiser measures it, and the broker and agent produce a price range; the office’s result is a price range, a pricing position and a list price recommendation.
Positioning within the range
Closed sales establish the range; pendings and actives position the list price within it and do not move it. A pending is the freshest evidence, read by list price and days to contract, and shows the list prices at which buyers are stepping forward now. An active with substantial exposure and no contract generally marks a price buyers have not yet accepted, and the subject is positioned below the most similar ones and under a search band edge rather than over it. Months of inventory, the segment’s active listings divided by its monthly absorption, and the measured trend in its median move the position toward the top of the range in a rising market with short inventory, leave it to the competition in a flat one, and move it ahead of a declining market to where the segment will be at contract. The position is written in a sentence beneath three separate tables.
Reductions and the conversation
A listing above its range tends to pass many of the segment’s active buyers in its first days and is then read one buyer at a time with its days on market beside it; the outcomes reach the office as a lower closing, an expired listing or a contract that may not close. The office reads showings, online activity, days on market and feedback against the segment’s figures at two checkpoints set before the listing goes live, and ordinarily reduces in one move to a position inside the range. The pricing conversation follows the order of the work, so that the recommendation is the last figure the seller hears and the questions that arise are ordinarily answered by a fact already in the analysis. The seller chooses the list price, and the range, the recommendation, the checkpoints and the seller’s choice are left with the seller and placed in the file.
Final check and workflow
The final quality check reads the analysis in the order it was built, from the subject through the language, before the seller sees it, and anything that fails is corrected at the step where it arose. The ten-step workflow states that order on one page.
What you can now do
A broker who has completed this section can reconcile three adjusted indicators into a range by weighting the sales and explain the weighting to a seller in a sentence; can state a price range without the word “value” and place a list price within it against the pendings and actives a buyer will see this week, adjusted for the segment’s months of inventory and trend; can set checkpoints at listing, read a listing’s activity against the segment, and decide when and how far a reduction goes; and can present the evidence in an order that answers the seller’s questions before they are asked, record the seller’s decision beside the recommendation, and run the office’s final quality check on the CMA before it goes to the seller.