If you’ve ever purchased or sold a home chances are you’re familiar with the term “comparative market analysis”. But do you know what it means? A Comparative Market Analysis (CMA) is an in-depth study that compares the price of similar properties on the market and recent property sales records to the home you’re considering purchasing or selling. The goal of a CMA is to find an accurate range of what the home you’re considering is worth. As your real estate agent we will complete a CMA for you because it's the best way to know what the realistic price for a home should be.
There can be a difference between the amount you’re asking for and what it is really worth. You do not want to over price your property and hope for unrealistic offers, nor do you want to bargain price the home when buyers will want to negotiate it down further. A comprehensive CMA will show you what price range your home falls into and it provides the statistics to back up the asking price.
As your real estate agent doing a CMA is part of what we do to assist you in selling or buying a home. This involves pulling data from the Multiple Listing Service (MLS) for homes currently for sale and for those that recently have sold in your area that are also the closest match to your property.
The homes in the report will be similar in square footage, lot size, condition, and features. Though no home may be identical to your own, educated guesses regarding the value in the differences will be made and added or subtracted. For example, a home like yours but without a garage will get the value of a garage subtracted from its price in the analysis.
Picking the wrong comparables (also called “comps”) creates the wrong price range. Your listing agent will share their comparables. Things looked at include:
• Type & style of home: Condos are not compared to houses, and a one story ranch is hard to compare to a two story colonial.
• Neighborhood & school district: The CMA will show comparables in the same or similar neighborhoods and school districts as your home.
• Location, location, location: Views, waterfront access, and even the type of neighborhood a home is in all factor into the home's value.
• Square footage: The comparables should be within 15 percent of your home's square footage.
• Number of bedrooms and bathrooms: Comparing larger homes with 3, 4 and 5 beds is fine but below that it gets tricky. Homes with one and two bedrooms do not compare well with 3 to 5 bedroom properties.
• Age of home: A new home makes a good comparison for new home construction or other homes under five years old. However, they’re valued far differently than older homes for sale.
• Condition of home: A fixer-upper would be compared only to other fixer-uppers just as a newly remodeled or maintained home would be compared to the same.
• Lot size and usability: Lot size is significant only when the difference is big. For example, a home with an acre of land can't be compared to one with a small back yard.
Some things about the property may not have the selling value that you might think it has. For example, properties with a pool might be nice for those buyers who want a pool but actually may work against you for buyers who don’t want the work or have small children. The same can be said for extensive flower gardens. This is a feature that probably does not add the value of what it cost you to install.
Once you have the CMA in hand you can see how similar properties were priced, how long it took them to sell and what the final contracted price was. You can also see what your competition is with similar homes for sale. This is how we determine what sale price you should consider.
If you have any additional questions about comparative market analysis please don't hesitate to get in touch with us at Remax at the Beach. We'd be happy to answer any questions you may have and do a market analysis on your home.