DIY Comparative Market Analysis

The old way: explain your real estate needs and desires to an agent, he searches for listings, wait, wait, wait until he shares the details with you.
The Redfin way: search for real estate on your own terms, whether in your PJs or work duds, get immediate information.

The old way: once you fell in love with a place the only way to find out what other nearby homes sold for nearby was to call an agent and ask for a comparative market analysis, or CMA.
The Redfin way: DIY! Redfin let’s you figure it all out yourself!

Let’s say you’re looking at moving to Pioneer Square in Seattle because you just accepted a job offer at Redfin. After a few minutes searching on Redfin.com, I found 97 S. Jackson St. #402.

But is this a good deal?

Redfin.com will tell you everything you need to know to make that determination. First, I would look at the details page for the listing (click on “Full Details” in the listing pop-up box).

Does it have a Zestimate? This one has a Zestimate of $618,021.

Does it have any past sales information? Yes, it sold for $387,000 in 1999.

Next, I would go back to the search page and look for similar listings on the market. I search for 1,000 to 1,500-square-foot listings and find 12.

At the bottom of the list below the map, we can see that similar units have a median price of $521,975, average square footage is 1,189 and average $/sq ft is $535.

This gives you a good sense of similar units on the market, but what have other similar units sold for? Click on ‘Show more options’ and select a timeframe under ‘Show Past Sales’ such as ‘Last 1 year’ or ‘Last 6 months.’

Now we can see a list of the units we are interested in along with two previously sold units in the same building.

Clicking on these similar past sales, we can get a good sense of what other listings have sold for in the neighborhood and compare the listing we are interested in.

Happy CMA’ing :).

Discussion

  • name

    Agents should stand up and applaud. After all, the tech industry is what fattened the bank accounts of the many customers they happily sold homes to. Now they want to bite that hand that fed them? Hypocrisy leaves a bad aftertaste.

  • nonymouse

    The most valuable contribution redfin makes is it empowers consumers to retain control of the buying process and to avoid the real estate gestapo.

    As a buyer currently shopping for a home, I dont want an agent to tell me when and where to spend my hard earned money. I want control, its only fair because it is my money.

    Real estate is a sales job and the bottom line for them is making the sale. Empowering consumers to view and purchase a home on their own terms is something you cant put a price on.

    Similar tremblings are going on in the insurance industry. P&C commissions used to feed a family of four, no problem. But with insurance companies now cutting out the middle men and offering policies direct to the consumer, insurance companies and customers are reaping the benefits.

    Its called life. Learn a new trade. Develop relationships with people so they will buy through you rather than treating them like a meal ticket and maybe the agents won’t have to worry about losing their precious meal tickets.

  • http://www.nwupdate.com James Hsu

    Nonymouse, ..sounds like you’ve been burned by real estate agents in the past or simply haven’t worked with one that is really doing their job …looking out for the best interest of their client. Empowering the buyers (or sellers) to research their own information is fine by me. Do all your research and I’ll do mine and then we can compare notes and see what the similarities in our conclusions are. Hopefully, they’re the same or really close! Great! So then what do you need an agent for right?!? I mean…you’ve done your CMA using redfin and zillow and whatever other online resource. Done!

    …err..not quite.

    The whole buying process is much more than researching homes and past sold data. The scope of it is much bigger and far reaching. I had a client that moved up from LA and was very excited about buying a house. Over the course of several weeks as we looked at stuff, I got to know their plans and future goals fairly well. When they showed interest in a house that was maxing out their budget, I had to give them a reality check. From my perspective, they were getting caught up in the …oh wow! for just a little more we can get so much nicer of a house…and if we went for a little more than that, we could get that house! …etc. etc. Sure they could afford it, but it would postpone their other investment goals if not eliminate them for a long time. These other goals were communicated to me over time and were important! After some convincing and reminding them of their longer term goals, they ended up buying a house several hundred thousand dollars less. Why’d I do this? CAUSE THIS IS WHAT WE’RE SUPPOSED TO DO!!! Not every agent would have turned a client away from a more expensive house, but I would have been doing them a disservice if I let them buy the more expensive house.

    Then there’s the whole process of actually making the offer and working through the transaction till closing. The pitfalls and tricks to watch out for from all the players involved. That’s really hard to do ….average buyer won’t know what problem to even look for. That’s where a good agent can also really help.

    The internet has brought information to the masses. I say great! It helps me as an agent cause it’s less of a guessing game for me to figure out what the buyers want initially. They say ..hey…here’s 5 houses we’d like to see. Okay…we go see them …what do you like? Why? what do you not like? Why? Why do you HAVE to have a 4-bdroom, what about a 3 bedroom and a den?…and here’s what I see that you may not recognize to see, like… it’s got LP siding and it’s showing signs of moisture penetration. Big red flag to the tune of $12k or more! Or, the legal description says the house is without air or mineral rights, …do you know how that might affect the property? …probably not. It could seriously impact how you want to use your property!

    So, I’m happy that the internet is empowering users to view homes online, but can you tell if the carpet is some cheap crap that’ll last maybe a year or good stuff that will last for a long time? How’s that roof looking, …or do you know what red flags are there to look for?

    It’s called knowledge and experience and for many people, …it’s invaluable.

    • Sam Malone

      In my experience an agent that does all this is extremely rare, if non-existent. And most of the issues mentioned above become apparent with a housing inspection, which is paid for by the seller.

  • http://myblog.daltonsazhomes.com Jonathan Dalton

    So what we’ve taught someone here is how to complete a CMA using outdated and possibly incorrect information? That’s tremendous!!

    I’m all in favor of buyers searching on their own to find their own homes. If I wasn’t, I wouldn’t have MLS search functionality on my site.

    The trouble is most buyers don’t know what they don’t know. They believe all that they see is all that there is and that’s just not the case.

    As James said, the Internet is bringing information to the masses. But it’s not bringing all the relevant information – just a taste. Just enough knowledge for someone to get into a lot of trouble if they don’t know what else is there.

    There was a restaurant/bar out here for a long time called The Monastery. The big attractions were the volleyball courts and ping-pong tables and also the grills where patrons would cook their own food.

    They could have promoted it similar to Matt’s statement about the Redfin way: DIY! We let you cook your own food.

    Read another way: we let you do all of the heavy lifting and research and then write an offer on a home we’ve never actually seen ourselves.

  • nonymouse

    Mr. Hsu, you make an excellent point about most consumers not knowing how to judge the quality of a roof, carpet or general construction.

    However does a real estate license make one an expert in construction? My understanding is a real estate license certifies that you understand the buying and selling process. Is it not also a fact that appraisers are hired as a third party to make these kind of assessments? So actually, the buyer could could hire the appraiser independently of the agent to make those kind of calls.

    At any rate, redfin has profiled their target demographic. Smart (smart enough to do the research to learn what needs to happen to buy a home) tech savvy, etc. An agent would have more value to someone that is outside of this demo.

  • nonymouse

    Oh and additionally, you should not take such a condescending attitude towards the public. It is insulting to imply the public “does not know what it does not know” as if they are too ignorant to ever possibly figure it out. I certainly would not use an agent that would posit that I am so dumb that I can’t get by without them.

    Lets put things in perspective here. Its not brain surgery or rocket science. A real estate agent won’t be winning a nobel prize any time soon. These days, people have less emotion about their homes. They buy to eventually make money on it. That removes a lot of the emotion and it is simply a transaction.

  • http://www.nwupdate.com James Hsu

    Nonymouse,
    Not sure how you interpreted my comments as being condescending towards the public. People in general when facing an unfamiliar situation don’t know what questions to ask. I had a colleague looking to buy a new laptop. He doesn’t know a hard drive from RAM. Am I condescending to say that he doesn’t know what the right questions are to ask?

    And “don’t know what they don’t know” wasn’t my specific quote. It was Jonathan’s.

    To answer your questions. No. A real estate license does not make an agent an expert in construction. Actually, a real estate license doesn’t even mean you know the process of buying or selling real estate. It simply means you have $180 or so bucks, you’ve taken 60 hours of education on real estate basics and law and you passed a test. Knowledge of buying and selling and construction comes from experience and seeing enough of them. As a buyer who buys on average a house every 7 years vs a productive agent who goes through double, triple or more home purchases than that in a single year, there’s simply no comparison in terms of who would have the upper hand in a transaction. No amount of online information can compete with that level of knowledge and experience.

    You are wrong with what you think an appraiser does. An appraiser’s job is simply to generate a value of a property using one of three methods (or any combination of them): sales comparison (the most common in residential real estate), income approach (more common in commercial/income generating real estate), and the cost method (determining how much it would cost to replace a structure…used when the other two don’t quite fit …say …like a church building). That’s all an appraiser does. Also, appraiser’s are very unlikely to be hired by individual homeowners. They are mostly hired by banks or insurance companies. Their job for the bank who is loaning someone money on a property is to tell the bank that yes, ..the sale price on the house you are loaning on is worth what it’s selling for so in case the borrower defaults on their loan, you will most likely be able to recoup your investment. As opposed to lending $500k on a house that’s only worth $400k. Then if the borrower defaults, the bank is out at least $100k even after they sell the house. That’s an appraiser for ya.

    What you are thinking of is a home inspector. And yes, a competent home inspector would be able to tell you bad siding or a bad roof, but it’ll cost you $350 to $400 dollars. Are you going to do that for every house you look at? An agent’s job is to help you weed out the bad houses (unless you’re rehabbing and you want the bad ones). The use of an inspector is usually done once you’ve found THE house and you need to know what potential mess you’re about to get into.

    Redfin’s target demographic is what you say it is based on their first year stats. However, I highly doubt Redfin wants ONLY smart and tech savvy clientele.

    You are also wrong in your blanket assessment that “people have less emotion about their homes.” If you were correct, then a buyer would probably buy any house in an appreciating market if they’re buying to simply make money on it. Yet that doesn’t happen, every buyer is picky and has desires and wants and needs. Does that also imply that in a flat market or a depreciating market that nobody will buy a house because they can’t make money on it? No. People buy homes to live in and as a bonus you get tax write offs and whatever market appreciation it generates. If it’s not an emotional thing, why are people so excited and happy when they finally get their keys? Why do they call me days, weeks, months later telling me how happy they are with their house? If you have proof that emotion in home buying is eroding away, show me. All I know is the countless people who are vocally in love with their houses.

    As a general rule, home buying can never be whittled down to become “simply a transaction.” There are people like you who simply see the purchase of real estate as a basic transaction. TV? check. Car? check. House? check. I have a client sort of like that right now,..he doesn’t really care about location as long as it’s got good potential for high appreciation but even he still wants a house that makes him go “wow!” In his words, he wants a place that will impress the girls. No emotion? C’mon.

    Nonymouse…sounds like you can either use the services, knowledge and advice of a good real estate agent ….or you should start reading more about the home buying process and all the different players involved before you try to diss an entire industry. Have you ever TRIED using an agent?

  • nonymouse

    Lastly, I strongly advise any agent that wants to dispense investment advice to be sure to get the proper securities license(s).

  • http://www.nwupdate.com James Hsu

    I do have the proper securities license to dispense real estate investing advice. It’s called a real estate salesperson’s license issued by the State of Washington. Whether or not someone wants to take my advice is up to them.

    dude…now you’re reaching.

  • http://myblog.daltonsazhomes.com Jonathan Dalton

    Since they were meant for me, I actually did have the proper licenses for securities as well until I let them expire.

    My apologies if I come off as condescending. But with the volume of incomplete or just plain bad information on the Internet, in most cases buyers will end up arming themselves with just enough information to get themselves into trouble.

    There’s a value to experience. There’s a value to knowing the difference between an appraiser and a home inspector and what each will do for you.

    Anyone can look up the basic process. But the nuance is in the details – the kind of details missing from the CMA lesson above.

  • nonymouse

    Sorry James, the condescending comments were for the other poster. You had a nice post.

  • http://www.redfin.com Cynthia

    Matt isn’t discounting a personalized, in-depth CMA. He’s simply letting buyers know how to use the site to learn more about a house, neighborhood, etc. It is a basic CMA like a lot of agents provide today.

    At Redfin, one of our goals to is provide open and honest information: we show everything we are allowed to from the MLS, we show past sales and tax data from the county, we even list Zestimates, although they don’t always jibe with list prices, we also recently added community and school information. All are examples of how we are using technology to give consumers the information they need to find a house, and we’ll continue to add new features and data sets.

    James – if I am reading it right, you’re implying that Redfin agents don’t work with clients from offer to close, go to inspections, or provide counsel when something just doesn’t seem/look right. These are things our agents do every day. For example, we have saved customers countless thousands of dollars during inspection – we find mold, water damage, etc. just like any other agent, and negotiate a better price for our customers. I do agree with your statement, “As a buyer who buys on average a house every 7 years vs a productive agent who goes through double, triple or more home purchases than that in a single year, there’s simply no comparison in terms of who would have the upper hand in a transaction. No amount of online information can compete with that level of knowledge and experience.” You’ve just explained the benefits of Redfin – we combine Redfin.com’s 24/7 online information with local agents whom handle tens of transactions a month.

    Cynthia, Redfin

  • http://myblog.daltonsazhomes.com Jonathan Dalton

    > It is a basic CMA like a lot of agents provide today.

    That’s the point, Cynthia. It isn’t. Even a basic CMA isn’t going to be based on year-old data. Maybe it was just a poor example, but referring to a year-old sale and the sales price of the property when it was purchased eight years ago is worthless.

    Again, information such as this gives the impression of letting the public in on some vast secret when all it’s doing is providing just enough information as to be without value.

  • nonymouse

    James, yes we actually have an agent in our extended family . And you know what? Every family member found their own house. They looked online, went to the open houses, and identified the purchase. Although the agent was supposed to be doing these things for us, he was spread too thin with all his other clients to be of any real value. But we did use him to close because of the obligation we felt.

  • http://www.redfin.com Cynthia

    Jonathan,
    I think you are referring to the date ranges in Matt’s example? The data is one-year-old if you select this timeframe, but you can narrow this to search for the last three months and even dive deeper by looking at individual properties in the immediate vicinity.

    As a buyer, I would find past sales information from a year or eight years ago very helpful. It gives me a good idea of appreciation (I hope!) in the area so I know whether the home would be a good investment. Honestly, I use this feature often. If I was going to sell my condo today, I know what others in the area sold for and the appreciation percentage. I would expect the buyer to do the same to check the validity of my asking price.

    Either way, it’s more information for consumers, and that in itself is valuable.

    Regards,
    Cynthia, Redfin

  • anonymous

    comps based on current listings don’t help the buyer as much as comps based on CLOSED DEALS. professional appraisals are based on comparable SOLD houses, not those listed on the market.

    this is the kind of data the public needs — the kind of data that agents/brokers keep hidden and SECRET.

    if Zillow allowed the user to review sale prices in the last 60 days, then the buyer would be better informed — this is what banks do when loaning the buyer money to buy the property. this is such a simple matter and it’s remarkable that the real estate cabal has had this information hidden away this long. if redfin wants to make buyers and sellers truly informed, figure out how to get the sales price data out there on your site.

  • Mike

    Redfin sure has a knack for making the fact that they don?t do dick for their clients as a good thing! I didn?t know other agents were preventing people from buying the homes they want! Jeeez, how longs that been going on? How about, never.

    First they make the fact that they aren?t going to actually show you any properties as a good thing. You?re empowered to go find the home you want, not the one the agent wants you to buy. Now it?s, ?we don?t prepare a stupid ol? CMA, we let you do it yourself. More empowerment.

    Redfin has brought nothing new to the market. They give rebates, they didn?t invent them. What they did invent is the agent that does nothing whatsoever for his/her client. Let us all praise them for that. NWMLS appreciates their illegal tactics so much, they fined them $50,000.

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  • Sam Malone

    Many Real Estate agents do not do their homework, which is the reason consumers have been forced to do the research themselves in order to protect their own interests (caveat emptor). Most of the ones I've encountered, even from reputable agencies, are only interested in a quick sale at the highest commission. They have often never viewed the property either, unless it's one of their own listings, and they've already shown it to others. They usually try to steer you toward ones listed with their agency too, because they make more commission. They will even tell you properties already have offers or are already sold when they are not. How do I know this, because I've had it happen on more than one occasion, I followed up on it, and found out they were lying. When I confronted them, they always blamed it on some miscommunication, wrong address, a secretary gave them the wrong information, etc… Beware of the “phantom offers” they tell you about in order to start a bidding war just as soon as you make an offer, or they think you are emotionally involved. I've caught them in a lie over this one too by calling the listing agent directly. And even if it was an unintentional mistake, this kind of sloppy incompetence can cost you the property, not to mention the time you've now wasted.

    The bottom line is that they do whatever is in their own best interest, not yours. And as long as there is commission involved your interests and theirs will never be the same. You want to pay less, and they will always want you to pay more. Until recently, agents have been a necessary evil. However, I'm not implying that all agents themselves are evil. It's not personal, as they themselves might think, it's just business. And it would be foolish to overlook the obvious. The way the industry currently operates encourages agents to do what is in their interests, which often conflicts with their clients. Unethical behavior is not necessarily illegal.

    So consumers who are techno-savvy enough to do their own research have a lot to gain. If you can forfeit the agent entirely, even better. Most people are much more intelligent than agents give them credit. This kind of condescension “they don't know what they don't know” is exactly what provokes their clients to do it themselves. And clients who are not very techno-savvy are probably not going to go the DIY route anyway, because most of them “do know when they don't know.” We all have friends, family, colleagues and associates who are buyers, sellers, agents, lawyers, inspectors, brokers, etc… We all gain from that experience, and the information is readily available, collective, and now easily accessible thanks to advanced technology like the Internet and Redfin. Knowledge is power, and agents no longer have a monopoly on it.

    Lawyers negotiate contracts. Inspectors inspect properties. In the past, agents have found properties and given you access to the grounds. Other than that, most of them, more often than not, are pretty useless in my humble opinion. And that's a pretty obvious observation they must have pondered themselves, or they wouldn't need to keep trying to convince everyone else otherwise. I don't have anything against agents in general. However, I do think their is too much opportunity for corruption, and the industry does little to prevent this, failing to police themselves. And I won't have my interests taken for granted only to be blamed later for not doing my homework. Buyer beware!