The first question every seller asks is “What do you think our home is worth?”
In order to price a listing, agencies create what’s called a Comparative Market Analysis (or CMA for short). A CMA basically compiles the sales results of similar properties to your property over a period of time in order to create a picture of the current market for your home. In order to save time and work, the industry standard today is to use an automated valuation system (similar to Zillow) to estimate your home's base value. An AVM culls information from other listings and town records in order to automatically generate a CMA.
These AVM services may look polished, but their algorithms can only provide generic pricing quotes for broad markets. The majority of Fairfield County properties don’t fit well into automated valuation systems. This is especially true for luxury properties. The fewer sales in a market, the less accurate predictive algorithms become. Additionally, luxury homes can rarely be described by the kind of data that an AVM collects because luxury homes are impossible to reduce to square footage and a number of bedrooms. The true appeal of a luxury home resides in the location, quality of workmanship, the masterful incorporation of design elements, and a more deeply considered aesthetic. Only an agent who has experience with comparable properties and who understands the micro markets influencing your pricing can make an accurate valuation.
While we do have a state of the art CMA program that we utilize for comparison purposes, we prefer to calculate our analyses ourselves - the human way. There is simply no way a few lines of code can adequately replace the market insight gained through 60 combined years of industry experience. We do a much deeper dive into listing accuracy, comparative sales, history, and micro markets, and account for the factors those algorithms can’t. And once we’ve compiled the best, most applicable dataset, we do something that no other residential real estate team we know of does: we perform a regression analysis to pinpoint which factors are most influential in determining an accurate quote for your listing.
If you’re not familiar with the term, regression analysis is a highly reliable method for determining how various variables (such as square footage and tax assessment) impact a topic of interest (such as sale price). The dependent variable is the factor that you’re trying to predict - in our case, sale price. The independent variables are the factors that can influence that sale price - all those facts that show up in every real estate listing (property size, number of BRs, baths, square footage, etc).
Collecting the necessary data for a proper regression analysis is time-consuming, which is why so few agents do it, and why more and more real estate agents are outsourcing their pricing determinations to cookie cutter algorithms. However, the real expertise comes in knowing which data to choose. The better your information, the more accurate your analysis will be. This is where our team shines. We account for the realities that the algorithms can’t. We know that a 3000 sq. ft. home with 1000 sq. ft. of finished basement is different from a 3000 sq. ft. home without. We know that a historic home doesn’t compare like-to-like to a new construction even in the same neighborhood. We evaluate each comparable sale, including factors like bank owned or distressed sales, property condition, negative circumstances, amount of inventory (competition), and changes in mortgage rates. We take the time to thoroughly research and refine our dataset. By understanding comparable markets beyond what an AVM would include, and eliminating all the bogus comparisons that an AVM wouldn’t know to exclude, we create the most accurate pricing models in the business.
Despite all of this, we also know that pricing your home isn’t just about the data. Ultimately, it’s your home, and it’s your decision. That means your goals and vision are essential. We look forward to unpacking our process for you and learning what matters most to you and where you find your value. Our aim is not only to provide you with the most comprehensive research available, but also to understand how that research fits into your vision, and, together, we’ll determine the valuation that makes the most sense for you.
