What is a CMA (Comparative Market Analysis)?
A CMA or Comparative Market Analysis is one of the greatest tools a real estate broker has. A CMA is valuable in the buy as well as the sell side. It is an in depth look at the current market value of a particular property or home. A CMA can make sure you don't over pay for your home or list your home too high or too low. People don't understand the importance of properly pricing your home from the very start. If you have all the time in the world to sell your home by all means just take a shot in the dark or list your home at the price you want to get from it. If you are like 99% of the public though that doesn't have 5 years to sell your home you may want a broker to do a CMA for you so you at least have an idea of what your home might bring.
A CMA is done in the same process as an appraiser would use. Please keep in mind a CMA is NOT AN APPRAISAL. Only a licensed appraiser can do an appraisal. A CMA starts with raw data from homes that were sold, under contract and listed in the area of the subject property with in a certain time frame, usually about 6 months unless it is a very unique property. The are called comps or comparables. I won't go into too much detail about comps since I have written an entire article about comps. You can just click the previous link and it will explain the details of comp gathering. I will say that picking proper comps is the key to a good and accurate Comparative Market Analysis.
The next step after picking the comps would be to adjust them slightly. Since we live in a unique area that all the properties are different and no two homes are the same, adjustments are very important to the CMA. This is also one of the most time consuming parts of the process. A good CMA could take many hours to complete if done correctly. I actually do this for FREE for all my clients. Yes I said I offer a FREE CMA to all my clients on any property they are going to sell or make an offer on. I'm not crazy i'm just a different kind of broker.
Next after all the data is adjusted, adjustments are always made to the comps never to the subject property. In other words you make the comparables more like the subject property. Adjust for land size, home size, number of beds, size of garage, square footage, age of home and many, many other parameters.
Your broker will then come up with an approximate range of your homes value that they will share with you. Where you fall on this range depends on your homes condition. Obviously if your home is in great condition and has all kinds of bells and whistles and upgrades, you will fall on the top of that range. If not and you have deferred maintenance or it is just weathered, you will be on the lower end.
So for all the FSBO people and buyers that "don't need a real estate broker", I salute you for taking this challenge to figure out how much money a property is worth all by yourself. I know many veteran real estate brokers that find a CMA to be one of the hardest parts of their job and they have been doing it for years.
So please call me anytime for that FREE CMA.
This is not real estate or legal advise. It’s just the views of a Realtor.