Trusting Your Comps

A few years back when the housing market was booming I had listed a home in Nautica in Miramar for $445,000, a beautiful 2 story upgraded to the max home. Within 3 hours the offers began to pour in, all around full price. The offer the seller accepted was a full price offer with a large deposit.

A few days later, as I have done for many years I was having coffee with Dan Crispino, and discussing the unbelievable market we were in. I was telling Dan that I didn’t think I understood this business any more. The very model that I had listed and sold in hours for full price, there were several others on the market they were listed from $80K to 120K above what I had just listed and sold this one for. Could I have under estimated the price in my comps and possibly hurt the seller? I said Dan my CMA is my instrument panel just like an airline pilot has, I have trusted mine throughout my career. Could I have misread it this time?

Many of you have probably seen the show “Seconds from Disaster” on the National Geographic Channel, where they reconstruct the final minutes before disaster and the causes.

The first episode that comes to mind is the air disaster above Germany when a Russian passenger plane and a German freighter collide at 30,000 feet with no survivors. Both planes had been in touch with air traffic control, when collision avoidance systems came on in both planes. Russian pilot was told to climb, German to descend due to on coming traffic. Both pilots believed there systems were faulty and began to try and find the fault within their respective cockpits. Well you know the rest of the story. What the pilots didn’t know was that the traffic control center was under staffed on this particular evening, leaving just 1 overwhelmed controller, who’s only telephone was out of order and being repaired. If only they had trusted their instruments.

The second series of incidents were with the new Boeing 727’s when they first came out there were numerous hard landings which caused failure in the landing gear, this was happening repeatedly. The FAA investigated every incident and was having a difficult time finding the problem. Well it came to their attention that the pilots enjoyed flying this light and highly maneuverable aircraft, they kind of thought of it as a sports car type plane. What really got their attention was they discovered that the pilots upon approach were flying visually as you would fly a small single engine plane and not watching their instrument panel and were misjudging their altitude causing these hard landings.

The same is true for the CMA it is your instrument panel. Well as I am talking with Dan about how I may have misread my instrument panel on this appointment the phone rings, and guess who? Yes the appraiser, he tells me he is about 20K short, we discussed and compare comps. What we found was that we were both using some of the same but the one with the major difference was a comp on the lake which he had given around $18K, I had seen that house, told him it was not on a lake but rather a large mud hole, he went checked it out himself and agreed with me, completed his appraisal at the sale price.

The point being trust your instruments and CMA, they work. I know what you are thinking, not in this declining market, Yes they do. You just need to know, how much lower you need to adjust down, and it all begins with a good CMA.

The top listing agents all know how to read their panel.