Comparative Market Analysis
The Power of Analysis.
A CMA is a fast way to get a good grasp on what a home is worth.
When done for a seller, a CMA helps ensure your property is priced right from the start. As a Buyer, a CMA helps ensure you make the best offer on the house you want to make your new home.
The Price Is Right
Property prices change frequently, and sometimes, drastically. A range of factors affect prices, from the state of the housing market to the fancy new fixtures trending on HGTV.
Although it can be a challenging question to answer, it is by far, the most important one to ask when selling your home:
"How much is my home worth?"
Your home's value is determined, not by what you think it's worth, but by what Buyers were willing to pay for similar homes. To understand that, you need a comparative market analysis (a.k.a. "CMA" or "comp"). A comparative market analysis estimates a home's value based on the recent sales of similar nearby properties.
"I don't like this wall color and the marble countertops are too 'marble-y'." For better or worse, Buyers are the deciders.
How They're Done
Realtors create CMAs by looking at comparable (comp) properties. These are recently-sold properties that are similar to your home. If you're a buyer, the comp would be done on the home you want to make an offer on.
The comp results are only as accurate as the properties are similar. What that means is that the similarity of the properties is key since that's what gets you an apples-to-apples comparison.
And a "ballpark estimate" just won't do. If a home isn't priced right from the start, it can often mean a long-term delay in selling. From the start, a Realtor should be able to provide you with a full, end-to-end comparative analysis that's rooted in data .
A Real-Life Example
Let’s look at a home with four bedrooms and two full and one half bathrooms that’s around 2,750 square feet.
Your neighbor's house down the block is also a four-bedroom house with two full and one half baths at 2,550 square feet—and it sold last week for $310,000. This means your house is likely worth that same price, right?
It might seem that way, but a list of different factors, some obvious and some not-so-obvious, that has to be considered. Things as simple as the construction of a deck could dramatically impact a home's value.
"Close enough" isn't good enough. If that's how your Realtor is thinking when (s)he prices your house, you could be losing time and money before you even start.
The Critical Factors
There's a list of critical factors that must be carefully researched in order for a CMA to be reliable. Comparable properties should:
- Have the same number of bedrooms and bathrooms
- Be located within roughly 1/2 mile of your home
- Have the same zip code and school district
- And the list goes on
Size matters, too. The comps should be within roughly 200 square feet. This is among the most challenging elements of a CMA and some Realtors don’t use it. This is because the comps may or may not include the square footage of their basements, which makes a big difference in the final square footage figure.
Comps should also be for properties that SOLD, not houses that are currently listed. This is because the house is worth whatever a buyer agreed to pay for it – not what the seller listed it for.
Who Does Them Best?
You can find comps by using a random online tool that will estimate your home value. So, why not do it yourself, right? Because a professional can do it better.
First, like me, most real estate agents will provide you with a reliable CMA for free. (Yes, there is such a thing as a "free lunch".)
Second, your house is special, right? Indeed. Realtors also know how to factor in important nuances like:
- Home style
- Lot size
- Curb appeal
- Locality to conveniences
- And so on
Next, Realtors also have access to tools that aren’t available to the public. Ones far better than what Google can offer.
Finally, the insight and interpretation is also invaluable. A good Realtor provides an up-to-the-minute snapshot of where the market is - as well as where it will be when you list your house.
Things change daily in our real estate market. This is true now more than ever as we navigate COVID-19 responsibly.
Surprises when you're selling your home can be costly, so make sure there won't be any.
Curious? Let's Chat!
As a potential buyer or seller, the CMA process is also a great way to get to know your Realtor. You can examine how they work and whether their thinking is aligned with yours. Consider it a good kickoff.
I'm happy to offer a no-cost, no-obligation, no-strings analysis so we can get to know each other.
Coldwell Banker Real Estate Services
6305 University Boulevard
Moon Township, PA 15108