Pricing, Market Analysis and Listing Preparation
What this domain tests
This domain tests your ability to build a defensible comparative market analysis, recommend a list price, and prepare a property for market. Expect questions on adjustment logic, absorption and days-on-market, and the difference between an appraisal and a CMA.
Core rules and concepts
- CMA vs. appraisal: a CMA is a brokerage opinion of value for pricing; an appraisal is a lender's valuation by a licensed appraiser. A CMA is not an appraisal and must not be presented as one.
- Comparable selection: choose recent sales of similar properties in the same market segment, adjusting for differences in size, condition, lot, age, garage, and upgrades. Adjust the comparable toward the subject, not the reverse.
- Market conditions: absorption rate (months of inventory) and days-on-market indicate whether it is a seller's or buyer's market. Under about four months of inventory generally favors sellers; over six favors buyers.
- List price strategy: price in the band where comparable properties sold, not where sellers hope; overpricing lengthens days-on-market and often nets less.
- Listing preparation: recommend repairs, decluttering, and staging that improve showings without over-improving beyond the neighbourhood.
- Document your analysis and keep the data behind your recommendation.
Worked example
Subject: 3-bed, 2-bath, 1,500 sq ft, no garage. Comparable sold at $620,000: 3-bed, 2-bath, 1,500 sq ft, with a single garage. A garage contributes roughly $25,000 in this market.
Reasoning: adjust the comparable downward for the feature the subject lacks: $620,000 − $25,000 = $595,000 indicated value. If two more comparables bracket $585,000–$605,000, recommend a list price near $599,000 to sit inside the competitive band. The mark is lost by adjusting the subject upward instead of adjusting the comparable, or by ignoring the garage entirely.
Traps that cost marks
- Presenting a CMA as an appraisal or guaranteeing a sale price.
- Selecting comparables from a different neighbourhood or segment without explanation.
- Forgetting to adjust for lot size, condition, or age.
- Recommending a price above the comparable band to "leave room to negotiate."
- Ignoring absorption rate when advising on strategy.