The Self Defense CMA is Also Good Client Service

It's Not What You Did - It's What You Can Prove You Did

The plaintiffs in a lawsuit in California claimed that the buyer representative did not advise them properly, or they wouldn't have purchased their home. They later learned of apparently very similar properties that sold at significantly lower prices.

If this becomes a trend, there should be many of us carefully examining our process as regards preparation and presentation of the CMA. My rural area is both blessed and cursed by a lack of plentiful comparable sales in a recent time frame. It's nice to not have to comb through a glut of recent sales for the best ones, but it's also more difficult to arrive at a valuation with great confidence. How do you protect yourself from claims later that you weren't thorough in your valuation practices and advice?

Self Defense CMA Part 1: Though some would argue that too much information is just as bad as too little, I provide even the comparable properties that I chose not to include in my CMA report. I place notes on them as to why they weren't included, such as:

• "Sufficient comparable sales closer to the subject property."
• "Across the school district line, skewing the relational value."
• "Sufficient more recent sales, would require time inflation adjustment."

There are other notes, but these are common. Then I make a copy for the file and present the rejected comps as a separate packet along with my CMA report. I don't go into the detail of the rejects, but I do talk about why that group is part of their package. An example from the above list would be a quick discussion of how the older sale would require some subjective estimation of property value changes since that time. "As we have plenty of very recent sales information, it would be unwise to make guesses as to appreciation of an older sale."

I want the client to have all of the information that was at my disposal when I made the selection of comparable properties. It's true that they might go over it and use the rejected properties to change their minds or lower their offers, however it's a rare occurrence. My reasons for rejection are solid and logical, thus the clients usually don't spend a great deal of time in examination of the rejects.

Self Defense CMA Part 2: Just as I do with listing prospects, I also include a separate CMA for currently listed comparable properties. I call this the Competitive Report. What's out there that is in competition with this property? Hopefully, you've shown them some of these, or have valid reasons for not doing so. The worst case might be that you have to show them one once they've seen it in this report. However, you can protect yourself by being thorough earlier in the process.

Now the clients know what's on the market, as well as what's sold as comparable properties. I have copies in the file if needed in the future to answer questions. Most agents and brokers are quite thorough in their CMA preparation. The question is, can you prove it later?