What is a Comparative Market Analysis/ CMA
A Comparative Market Analysis is a report suggesting the most likely sell price of a home in the real estate market. The most likely sell price is what would be considered to be fair market value. At the very least a CMA will include a minimum of 3 homes that are similar to that of the subject home in size, location, condition and function. It is also important that the comparable homes have not sold in more than 6 months from the report date.
Ideally, If we could find 3 identical homes on the same street that sold in the past 6 months, When starting a CMA we try to stay within one mile of the subject property, with the same style home similar year built and square footage no more than 20% above or below the subject properties square footage.
Once we decide what properties to use as comparables we will than make adjustments for, bathroom counts, garages, finished basements and so on…. In the final report we will give a suggested sell price with a range of a low to high price range.
As a home seller, it is important to be realistic about your home and price where It ultimately becomes the sellers choice of where to price their home.
DETERMINING VALUE
LOCATION:
* Location is an extremely important factor in deciding the value of your home.
* Where it is situated in a subdivision, perhaps it backs up to power lines, busy avenue, corner lot, facing the sun or other variable locations which can cause an adjustment in price.
COMPETITION:
* Prospective buyers compare your property against competing properties.
* You are competing with every other home that is currently for sale: new & pre-owned, those listed with agents & those trying to sell themselves, in your area & other areas.
TIMING:
* Property values are affected by the current real estate market.
* As the real estate market cannot be manipulated, a flexible marketing plan should be developed which analyzed the current marketing conditions & individual features of the property.
CONDITION:
* The condition of the property affects the price & speed of the sale.
* As prospective buyers often make purchases based on emotion, their first impressions are most important.
* Optimizing the physical appearance of your home will maximize the buyer’s perception of value.
* If buyers have a choice of two comparable properties similar in price, they will choose the one in the best condition.
PRICE:
* Pricing your home properly from the beginning is an important factor in determining the length of time it will take to sell your home.
* Reviewing this home marketing plan will assist you in determining the best possible asking price.
* If buyers have a choice of two comparable properties similar in condition they will choose the one that is less expensive.
In a Comparative Market Analysis we will show:
Active Listings- Homes that are on the market that your home will compete with. This will give you an idea of what’s moving and what’s not. Sometimes homes based on active listings can be indicative of fair market value but caution needs to be made as anyone can list a home for any price.
Under Pending Listings- This will give you an idea of what is moving and which way the market may be heading. If you list your home for sale above these prices you will probably be looking at much longer days on market and price changes along the way.
Sold Listings- Sold homes will give you the best sense of where the market currently is for your home. Again be practical and keep the emotion out of your decision making process.
Remember anyone can list a home for sale at any price… but only homes priced properly sell.
A Comparative Market Analysis will give you a range of the most likely selling price as well as how long it may take to sell your property by giving average days on market. As the home owner, it is your decision on where to price the property. Review all data while keeping an objective view. When delivering a CMA we will also look at several averages to see where the CMA lines up. It will be best to look to see where the average falls for the square footage, a particular style and or room, bed and bath count. Typically you will see a pattern in the pricing.
One last piece of advice
Before ever looking at a Comparative Market Analysis, decide to choose your agent based upon experience, their marketing plan and their reputation not the agent who give you the highest indicated sale price. Quite honestly, most sellers go with the agent that can tell them they will receive the most amount of money. At the end of the day your home is going to sell for what the general public is going to pay, not what your neighbor thinks the house is worth or not what a real estate agent thinks a house is worth. So review the data, price your house right to begin with and you’ll be far happier!!
