A Comparative Market Analysis (CMA) is an estimate of a home’s value used to help sellers set listing prices, and to help buyers make competitive offers. The Comparative Market Analysis is an important tool for buyers and sellers alike. Sara and Lisa are experts at creating and analyzing a Comparative Market Analysis.
A CMA helps sellers choose the best listing prices for their homes. Set the price to low and it leaves money on the table, or set it too high and run the risk that it doesn’t sell at all. For buyers, a CMA can verify if a home is a good deal and help pinpoint a competitive offer that will be taken seriously—without going overboard.
Elements of a CMA
A CMA analyzes many characteristics determine price. Elements include the location, age, size, construction, style, and condition. The location and property address are also factors.
Next, for comparison, three to five properties with similar addresses and features are chosen.
Then each of these factors are considered and numbers are calculated for all the properties.
- A description of each property, including elevation, floor plan, and the number of bedrooms and bathrooms
- The square footage of each property
- The sales price of each comp
- Dollar adjustments for any differences
- The adjusted sold price per square foot of each comp
- The fair market value of the subject property and comparable.
CMA Versus an Appraisal
A Comparative Market Analysis (CMA) is the most accurate way for Sarah and Lisa to determine the market value of your home. But do not confuse it with an appraisal. While the appraiser’s job is to accurately but conservatively determine the value of a home to assure the lender that they will recoup most or all their investment if the buyer defaults on the mortgage, Sarah and Lisa work for the home seller. It is their jobs to determine the highest possible price they can get in the current market when they sell the home.
Important Factors in Choosing the Comps
Sarah and Lisa are highly skilled at choosing comps, as no two homes are identical, they must be similar in many ways to be an accurate representation and adjustments must be made when necessary. Here are some important things to consider when choosing comps.
- The comps should be selected from the most recently sold homes. Older sold prices will not accurately represent the current market.
- The homes should be in the same neighborhood or as close as possible. Prices can vary widely by neighborhood.
- Comps should be as similar to the home being valued as possible—bedrooms, baths, size, garage size/type, etc.
- Average Sold Price per Square Foot
Once Sarah and Lisa perform all the necessary calculations in regard to the sold prices of the comps, they average them at a price per square foot, and multiply by the square footage. This will give them an approximate market value of your home.
Want to know more about Comparative Market Analysis or learn more about how to determine the best listing price for your home? Contact Sarah and Lisa today!