Comparative Market Analysis (CMA)
Comparative Market Analysis
A Comparative Market Analysis Report or a CMA is the best tool or method available to home sellers to learn their home’s current value so they can select the best sale price..
Everyone who has ever sold a car knows they have to first find out how much it is worth and what people are willing to pay for it. It’s easy to gather the information you need to set a price from newspapers, the Blue Book, or online used car sales sites. When you’ve gathered this information you can then set a price that potential buyers will find attractive. It’s really pretty simple and requires very little pricing expertise. For Real Estate a Comparative Market Analysis Report or CMA is used for the same purpose.
If you want to sell your home, it’s not so easy and it’s certainly not simple. The value of your home is much more difficult to predict and the information available to home sellers can be untrustworthy. Online home valuation sites are fun to play with, but they are based on past sales, not current market factors. Newspaper listings give you some information, but houses are usually so different that it’s hard to compare.
The best method available to home sellers to learn their home’s current value so they can select the best sale price is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home’s worth in today’s market.
When should I ask for a CMA?
If you don’t get a comparative Market Analysis Report before you list your home you might try to sell it for the wrong price. Setting the price too low means you’ll get less money for your home; setting it too high means it might not sell at all. Every real estate agent in the country will want to complete a CMA on your home before helping you sell it. Sellers who haven’t yet chosen a real estate agent often ask several agents to complete CMAs so there is opportunity to meet different agents and to see how they work.
How is a Comparative Market Analysis Report prepared?
First, an agent will walk through your home. The home does not have to be in perfect condition. However, property condition does affect price, so if you plan to do work on the property, let the agent know. At this point the agent may recommend improvements to increase your home’s value.
Second, the agent will research information about comparable properties in the area, usually using a real estate industry resource called the Multiple Listing Service. This includes:
- Properties that have sold and closed within the last 12 months
- Active listings – properties currently for sale
- Pending sales – listings that have sold but not yet closed
- Expired listings – properties that did not sell during the listing period
Lastly, the agent suggests a probable selling price. Don’t be surprised if a Comparative Market Analysis Report results in a price range rather than a set price, particularly in markets where there are price differences due to property size, age, architectural style or physical condition.