CMA vs Zestimate - Just The Facts Ma’am
May 7th, 2007 Deeper Thoughts
In my earlier post A CMA is better than a zestimate because I said so I asked a question indirectly.
Does anyone ever ask a realtor “how close to an actual sales price have your prior CMA’s been?”… Realtors are all advertising crap like; “#1 In Your Local Area”, “Top 7% Nationally”, “20 Years In The Business”. You never see; “My CMA’s are within 2% of actual sales prices call now and get one”.
What followed was a string of comments pummeling Zillow. Many of the comments I agree with, there are after all many reasons to think that a CMA should be vastly more accurate than a zestimate from Zillow. Heck even Zillow thinks a CMA should be more accurate than a zestimate.
Unfortunately all those comments (plus everything else written on the real estate blogs I’ve read to date) are not much more than ad hominem attacks on Zillow.
The argument goes something like this…
“Zillow’s estimates of value are terrible.”
“Zillow are clueless smucks who know nothing about real estate and are trying to disintermediate Realtors. They are misleading the public to think their zestimates are accurate when they are not”.
“Thats why a CMA is better than a zestimate”.
If you can’t see how that argument doesn’t exactly hold water, let me spell it out for you. The correct way to argue in order to prove zestimates are less accurate than a CMA, is to offer proof that CMA’s are more accurate than zestimates. eg;
“Zillow gets within 10% of an actual sales price 62% of the time”. (actual national figure)
“Realtors doing a CMA get within 5% of an actual sales price 90% of the time”. (completely made up figure)
“Therefore a CMA is on average more accurate than a zestimate”.
So let me ask the question explicitly this time around….
How good are your CMA’s at coming up with an actual sales price?
I don’t want reasons why your CMA’s are good. I don’t want whining about Zillow. I don’t want an explanation of how you even come up with a number. I really don’t care if you read tea leaves to get a number, or use the Tarot, or roll the bones, or count the number of white cars you pass on your way to the office. You can throw a dart blindfolded at an MLS print out, you can take the number on the letterbox add all the numbers together and multiply by 9000. I really don’t care if you use comps or just freaking guess based on your market knowledge. How you get your number is up to you. The only, ONLY, thing that matters is how good is the number.
All I want is your overall accuracy on getting your CMA’s to an actual sales price. Like the good guys used to say…
“Just the facts ma’am. Just the facts.”
And for the record, I haven’t even collected this data on myself. Though I’m going to from now on.
May 7th, 2007 at 9:30 am
So you didn’t get the answer you were looking for, so I’ll go with you on this one:
1. A CMA is trackable like you said. My husband actually keeps his CMA and all other listing presentation items filed with their listing agreement and I would be willing to hypothesize that his CMA has come within 5%, 90% of the time- I think that’s pretty fair. However, we have to remember that a seller is the ultimate price setter. They may need to sell quickly or they may be in it for a massive equitable return- both affect what THEY set the sales price at after they have seen a CMA. Therefore, a “sold price” is not always indicative that a CMA was wrong (thus 5% is fair).
2. A CMA done by a local EXPERT will take into account the commercial real estate market in the surrounding area, will take into account the direction the neighborhood has taken (an assessor may say a home is worth $300,000 but if you drive out and see that the neighbors are all renters who don’t own mowers and put foil in their windows, no person will logically pay $300,000 to live in a glorified apartment area, not even in Austin). A Realtor will know that the new subdivision backing up to your backyard will be golf course view homes starting at $1 million, that the builder in your current neighborhood is jacking up the prices by $30,000 each month that passes (seriously this is happening). Therefore, a CMA is STILL a better estimate of price- above Zillow (who cannot possibly be local and will use the county’s information along with a magical algorithm to contrive a “zestimate”- fine), an uneducated appraiser (one in our home didn’t know any of the aforementioned factors were taking place in our neighborhood), or a C/21 first timer’s CMA (as Jeff noted previously). An experienced realtor is on the ground and has a great omniscience about him/her.
3. A CMA should also not be contrived prior to becoming familiar with the actual home. Irreversable curry or cat pee smell definitely affects what kind of a profit you will make. A beautiful home that has been altered without permits (and is therefore not legal) will not earn as big of a payday, nor will a home that ripped all of the upgraded berber carpet out and stained all of the concrete death black (and the owners will not budge on changing this because they personally like it), nor will a home that backs up to a trailer park or a dump- all of which no one would know without familiarizing with the home.
So, I maintain your assertion that a CMA is more accurate than anything and it is ALWAYS better- because I SAID SO! Even Zillow directs people go get an experienced Realtor’s CMA! But in reality, even a CMA can be off (if a Realtor has been lazy by not knowing the home, the subdivision, the area, the city, etc). I believe the 5% only 90% of the time could be increased to “within 5% all of the time” for the experienced of mind.
Even Greg has said he (as any hyper-experienced Realtor can) can tell you a home’s price within $1,000- it IS A SCIENCE, not a pop-up-ad-for-fun.
May 7th, 2007 at 2:43 pm
And you wonder why your comments get pirated Lani.
The gold I’m mining for is in point one. Namely “within 5%, 90% of the time”.
I do agree with everything else you say by the way. Though I’d rather see it all framed as an explanation on why a CMA is proved to be better, rather than an argument for a CMA being better.
To get the proof, we need the objective data that CMA’s routinely come closer to an actual sales price than a zestimate does.
In short…
We need the facts ma’am, just the facts.
May 8th, 2007 at 7:06 am
Interestingly enough, my last five listings sold received offers within 2% (usually 2% less) of my CMA.
May 8th, 2007 at 8:33 am
Thanks Jonathan. Does everyone see how that simple, undramatic statement proves a CMA is better?
May 8th, 2007 at 8:58 am
I’m not dramatic, I’m thorough…
May 8th, 2007 at 9:29 am
Um… yes you are dramatic.
/runs for cover
(Actually for a blogger like yourself, thats an incredibly good thing.)
In terms of changing public perception though, I think the answer might just be being exceptionally dull and being a broken record comparing the accuracy of Zillow to the accuracy of a CMA.
May 8th, 2007 at 9:34 am
Fine, I’m drama; whatever.
Hey, you’re right. Even Zillow says to get a CMA- point received- they are NOT comparable, so why waste breath comparing them?
On this debate:
Athol= 1 point
Sock= 0 points
Starting a fight between you and your alter ego- THAT’S drama!
May 8th, 2007 at 9:44 am
I’m following this line of thought via influence of Sellsius. JF has made the great point that if the public percieves Zillow as accurate, then they won’t even bother following up with a realtor.
You do have to dig through a few layers on Zillow to find the actual accuracy of the site. My experience of telling people that Zillow is only within 10% of sales price 62% of the time, is a horrified reaction.
I’m just hunting the numbers down for what an average CMA is.
May 21st, 2007 at 7:38 am
[…] Along the lines of promoting solutions rather than lonely criticism without recommendation, our favorite post of the week came from Athol Kay of RE Agent in CT. Athol proposes that instead of Realtors simply criticizing Zillow’s zestimates, they put them in context. Every comment around the accuracy of a Zestimate should be accompanied by something like “When I do a CMA I get within 5% of an actual sales price 90% of the timeâ€. As Athol concludes “Just the facts ma’am. Just the facts.†[…]
May 21st, 2007 at 4:00 pm
[…] ‘CMA vs. Zestimate - Just The Facts Ma’am’ by Athol Kay is a call to action for realtors to track the accuracy of their CMA’s to the actual home sale price. That should provide some concrete evidence for why a CMA is better than a Zestimate from Zillow. […]
May 21st, 2007 at 10:21 pm
[…] Homethinking Blog hosted the 43rd Carnival of Real Estate and was swamped with posts about Redfin on 60 Minutes laced with venom, so my cool calm and collected post about CMA’s and Zestimates must have seemed like a glass of lemonade on a hot day. […]
May 22nd, 2007 at 4:50 am
Hi Athol,
Very good post. I am 100% a listing broker and have been in my market for 13 years. Unfortunately, I have never tracked an actual percentage of cma to sales price. Sounds like something I need to start doing. If I had to take an educated guess it would be well within 5% 100% of the time. My market is “cookie cutter” housing so it’s very easy to come up with market value.
May 22nd, 2007 at 5:39 am
Hi BB, glad you liked it.
Tracking shouldn’t be all that much work either and could even turn into a office game.
June 6th, 2007 at 4:17 pm
[…] There’s a theory in real estate that you’re sometimes better off being the second agent to list a property, because the sellers often are far more motivated and will follow pricing and other advice more readily. The natural assumption is that the second agent also is being more realistic in their pricing suggestions than the original agent - an assumption given life by Mr. Kay’s question of how close your market analysis comes to the actual sales price. […]
April 18th, 2008 at 9:11 pm
[…] the Carnival of Real Estate. CMA vs Zestimate - Just The Facts Ma’am. Pretty much after that post the venomous assault on the accuracy of zestimates all but disappeared […]