Getting good at CMA Reports in Excel: A Step-by-Step Guide
So, In the lively world of real estate, a Comparative Market Analysis (CMA) is an indispensable tool. It provides a detailed snapshot of the market, allowing agents and investors to figure out the fair market value of a property. While specialized software exists, getting good at the art of creating a CMA report in Excel offers unparalleled flexibility and customization. This thorough guide will walk you through the entire process, equipping you with the skills to generate impactful CMA reports using Microsoft Excel.
I. Understanding the Fundamentals of a CMA
So, Before diving into Excel, it's important to understand the core components of a CMA report. This knowledge will guide your data gathering and analysis process.
A. Key Components of a CMA Report:
Subject Property Details: This includes the handle, property type (single-family home, condo, etc.), square footage, number of bedrooms and bathrooms, lot size, age. Also, any unique features or improvements.
Here's the thing: You see, Comparable Properties (Comps): These are similar properties that have recently sold in the same area as the subject property. Ideally, comps should be located within a mile radius and sold within the last six months.
Here's the thing: You see, Listing Price/Sale Price: This is the price at which the comparable property was listed and the final sale price.
Days on Market (DOM): This metric indicates how long a property was listed before it sold. A shorter DOM most of the time suggests a stronger market.
Adjustments: These are dollar amounts added or subtracted from the sale price of a comp to account for differences between the comp and the subject property. Common adjustments include differences in square footage, number of bedrooms/bathrooms, lot size, garage/parking. Also, amenities.
In fact, Adjusted Sale Price: This is the sale price of the comp after all adjustments have been applied.
Estimated Market Value: This is the estimated value of the subject property based on the adjusted sale prices of the comparable properties.
B. Identifying and Selecting Comparable Properties:
You see, You see, The accuracy of your CMA hinges on the quality of your comparable properties. Here's how to select the best comps:
Location: Put first properties in the same neighborhood or within a one-mile radius.
Property Type: Compare apples to apples. If the subject property is a single-family home, only use other single-family homes as comps.
Here's the thing: Size: Look for properties with similar square footage and lot size. Aim for comps within 10-20% of the subject property's size.
So, Age: Choose properties built around the same time as the subject property.
So, Features: Think about features like the number of bedrooms and bathrooms, garage/parking. Also, amenities (e.g., pool, updated kitchen).
Sale Date: Focus on properties that have sold within the last six months. Recent sales provide a more accurate reflection of current market conditions.
II. Setting Up Your Excel Spreadsheet
Now that you understand the fundamentals of a CMA, let's set up your Excel spreadsheet. A well-organized spreadsheet will make easier the data entry and analysis process.
A. Creating Column Headers:
Start by creating column headers that correspond to the key components of a CMA. Here's a suggested structure:
Column | So, Here's the thing: In fact, Header | You see, Description |
|---|---|---|
A | Property Deal with | Full handle of the property (Subject or Comp) |
You see, B | Property Type | (e.g., Single-Family, Condo, Townhouse) |
You see, C | Here's the thing: Square Footage | In fact, Total living area in square feet |
Here's the thing: D | Bedrooms | Number of bedrooms |
In fact, E | Bathrooms | Number of bathrooms (including half baths) |
F | You see, Lot Size (Acres) | Lot size in acres |
So, Here's the thing: G | So, You see, Year Built | Year the property was built |
In fact, H | In fact, Sale Date | You see, You see, Date the property was sold |
You see, You see, I | So, Sale Price | Final sale price of the property |
J | You see, Here's the thing: List Price | Original list price of the property |
So, K | Days on Market (DOM) | Number of days the property was listed |
L | Garage/Parking | Description of garage/parking (e.g., 2-car garage, carport) |
So, M | Pool | Yes/No indicator for a pool |
Here's the thing: N | In fact, So, You see, Other Amenities | Here's the thing: Description of other amenities (e.g., updated kitchen, fireplace) |
O | Sqft Adjustment | Dollar adjustment for square footage difference |
You see, P | Bed/Bath Adjustment | You see, Dollar adjustment for bedroom/bathroom difference |
Q | So, Lot Size Adjustment | You see, So, Dollar adjustment for lot size difference |
R | Garage/Parking Adjustment | Here's the thing: In fact, Dollar adjustment for garage/parking difference |
S | Here's the thing: Pool Adjustment | You see, Dollar adjustment for pool |
T | Other Amenities Adjustment | You see, Dollar adjustment for other amenities |
U | Here's the thing: Total Adjustments | Sum of all adjustments (O through T) |
So, V | Here's the thing: Adjusted Sale Price | In fact, Sale Price + Total Adjustments |
B. Formatting Your Spreadsheet for Clarity:
Freeze Panes: Freeze the top row containing your headers to keep them visible as you scroll down. (View > Freeze Panes > Freeze Top Row)
Format as Table: Convert your data range into an Excel table for easier sorting and filtering. (Insert > Table)
Number Formatting: Format the Sale Price, List Price. Also, adjustment columns as currency. Format the Lot Size column as a number with appropriate decimal places.
You see, Conditional Formatting: Use conditional formatting to highlight important data points, such as DOM values above a certain threshold.
Column Width: Adjust column widths to make sure all data is visible.
III. Data Gathering and Entry
You see, With your spreadsheet set up, it's time to gather and enter the data for the subject property and comparable properties.
A. Sources of Data:
Multiple Listing Service (MLS): The MLS is the primary source for real estate data, including property details, sale prices. Also, listing history.
Public Records: County assessor's offices and other public records can provide information on property characteristics, ownership. Also, tax assessments.
In fact, Online Real Estate Portals: Websites like Zillow and Realtor.com can offer preliminary data. But, it's important to verify the information with more reliable sources.
Property Inspections: A property inspection can reveal details about the condition and features of a property.
B. Entering Data for the Subject Property:
So, Enter the details for the subject property in the first row of your spreadsheet. This will serve as the benchmark for comparing the comparable properties.
C. Entering Data for Comparable Properties:
Enter the data for each comparable property in subsequent rows. Be careful in your data entry to make sure accuracy.
IV. Making Adjustments
Here's the thing: Adjustments are the most critical and subjective part of the CMA process. They account for differences between the comparable properties and the subject property, allowing you to arrive at a more accurate estimated market value.
A. Determining Adjustment Values:
You see, In fact, There's no one-size-fits-all way to determining adjustment values. Here are some common methods:
Paired Sales Analysis: This involves finding pairs of properties that are nearly identical except for one feature. The difference in sale price between the two properties can be used as an adjustment value for that feature.
Cost Way: This involves estimating the cost to replace a feature, such as a pool or an updated kitchen.
Market Research: Consult with other real estate professionals and review market data to understand how different features impact property values in your area.
B. Common Adjustment Categories:
Here's the thing: Square Footage: A common adjustment is made for differences in square footage. A general rule of thumb is to adjust by a certain dollar amount per square foot (e.g., $50-$100 per square foot).
Bedrooms and Bathrooms: Adjustments may be necessary for differences in the number of bedrooms and bathrooms.
Lot Size: Adjustments may be made for significant differences in lot size, especially in areas where lot size is highly valued.
Garage/Parking: A garage or covered parking can add value to a property.
In fact, Pool: A pool usually adds value, but the amount changes depending on depending on the location and market conditions.
You see, Amenities and Upgrades: Adjustments can be made for features like updated kitchens, renovated bathrooms. Also, high-end finishes.
Here's the thing: Condition: If a comparable property is in a lot better or worse condition than the subject property, an adjustment may be necessary.
C. Applying Adjustments in Excel:
Here's the thing: Enter the adjustment values in the appropriate columns (O through T). Remember to use negative values for features that the comp has but the subject property lacks. Also, positive values for features that the subject property has but the comp lacks.
D. Calculating Total Adjustments and Adjusted Sale Price:
In the 'Total Adjustments' column (U), use the SUM function to add up all the individual adjustments for each comparable property:
=SUM(O2:T2) (assuming the first comp's data starts in row 2)
You see, Here's the thing: In the 'Adjusted Sale Price' column (V), add the 'Total Adjustments' to the 'Sale Price':
=I2+U2 (assuming the first comp's sale price is in column I and total adjustments in column U)
V. Analyzing the Data and Estimating Market Value
With the adjusted sale prices calculated, you can now analyze the data and estimate the market value of the subject property.
A. Calculating Key Statistics:
Here's the thing: Average Adjusted Sale Price: Use the AVERAGE function to calculate the average of the adjusted sale prices of the comparable properties.
=AVERAGE(V2:V[last row])You see, Median Adjusted Sale Price: Use the MEDIAN function to calculate the median of the adjusted sale prices. The median is less sensitive to outliers than the average.
Here's the thing:
=MEDIAN(V2:V[last row])Range of Adjusted Sale Prices: Figure out the highest and lowest adjusted sale prices. This provides a range of potential values for the subject property.
So,
=MAX(V2:V[last row])for the highest=MIN(V2:V[last row])for the lowest
B. Considering Outliers:
Identify any outliers – comparable properties with adjusted sale prices that are in a big way higher or lower than the other comps. Look at the reasons for these outliers and whether they should be excluded from your analysis. Outliers can skew the average and median, leading to an inaccurate estimated market value.
C. Weighing Comparable Properties:
You see, Not all comparable properties are created equal. Some comps may be more similar to the subject property than others. Look at weighting the comps based on their similarity. For instance, you might give a higher weight to a comp that is very similar in size, location. Also, features.
D. Determining the Estimated Market Value:
In fact, Based on your analysis of the adjusted sale prices, outliers. Also, weighting, arrive at an estimated market value for the subject property. This may be a single number or a range of values. Think about the current market conditions and any unique characteristics of the subject property that might influence its value.
VI. Creating Visualizations and Charts
Visualizations can make better your CMA report and make it easier to understand. Excel offers all kinds of charting options.
A. Common Charts for CMA Reports:
Bar Chart: Compare the sale prices of the comparable properties.
Scatter Plot: Show the relationship between square footage and sale price.
In fact, Pie Chart: Illustrate the distribution of property types in the market.
B. Creating Charts in Excel:
So, Select the data you want to chart.
So, Go to the 'Insert' tab and choose the chart type you want to create.
You see, Customize the chart by adding titles, labels. Also, legends.
VII. Generating the CMA Report
Here's the thing: Once you've completed your analysis and created your visualizations, it's time to generate the CMA report. This can be done directly in Excel or by exporting the data to another program for formatting.
A. Structuring the Report:
A well-structured CMA report should include the following sections:
Cover Page: Include the property handle, date. Also, your contact information.
You see, Executive Summary: Provide a brief overview of your findings and the estimated market value.
You see, Subject Property Details: Include a detailed description of the subject property, including photos.
In fact, In fact, So, Comparable Property Details: Include information on each comparable property, including photos, sale prices. Also, adjustments.
Data Analysis: Present your analysis of the adjusted sale prices, outliers. Also, weighting.
So, Estimated Market Value: Clearly state your estimated market value for the subject property.
Here's the thing: Visualizations: Include charts and graphs to support your analysis.
Here's the thing: In fact, You see, Appendix: Include supporting documentation, such as MLS listings and property records.
B. Formatting the Report:
Use a professional font and layout.
In fact, Here's the thing: Include clear headings and subheadings.
Use bullet points and tables to organize information.
Here's the thing: Proofread carefully for errors.
C. Exporting to PDF:
In fact, To create a professional-looking report, export your Excel data to a PDF file. This will make sure that the formatting is preserved and that the report can be easily shared.
VIII. Good methods and Tips
Here are some good methods and tips to help you create effective CMA reports in Excel:
Be Objective: Strive for objectivity in your analysis and avoid letting your personal opinions influence your adjustments or estimated market value.
In fact, Document Your Adjustments: Keep a detailed record of how you arrived at your adjustment values. This will help you justify your analysis and answer any questions from clients.
You see, Stay Up-to-Date: Real estate markets are constantly changing. Stay informed about current market trends and conditions to make sure that your CMA reports are accurate and relevant.
So, Continuously Improve: Practice makes perfect. The more CMA reports you create, the better you'll become at selecting comparable properties, making adjustments. Also, estimating market value.
You see, In fact, So, Look at Professional Development: Take courses or attend workshops to make better your knowledge of real estate appraisal and CMA techniques.
Use Excel Templates: Look at using pre-built Excel CMA templates to save time and make sure consistency. Many free and paid templates are available online.
Automate Repetitive Tasks: Use Excel's features like macros and formulas to automate repetitive tasks, such as calculating adjustments and generating charts.
Here's the thing: Collaborate with Other Professionals: Discuss your CMA reports with other real estate professionals to get their feedback and ideas.
IX. Conclusion
In fact, Creating CMA reports in Excel is a valuable skill for real estate professionals and investors. By following the steps outlined in this guide, you can reveal the power of Excel to generate complete and insightful CMA reports that help you make informed decisions. Remember to focus on accurate data gathering, objective adjustments, and clear presentation. With practice and dedication, you can master the art of CMA reporting in Excel and gain a competitive edge in the real estate market.
X. Disclaimer
So, This guide is for informational purposes only and should not be considered professional financial or real estate advice. Always consult with a qualified professional before making any investment decisions.