Free Market Analysis
CMA Comparative Market Analysis
Before putting a home on the market with a real estate agent, savvy home sellers obtain a comparative market analysis, also referred to in the industry as a CMA. Real Estate agents will do a CMA to better educate & make sellers aware of the value of their home in their current market place.
By going to active, pending, sold, or expired property records, the real estate professional selects properties that are similar to the subject property and in the same area. By comparing these properties, and adjusting for feature differences, an estimate of value is made for the subject property.
Active Listings are homes currently for sale. These listings matter only to the extent that they are your competition for buyers. They are not indicative of market value because sellers can ask whatever they want for their home. It doesn’t mean any of the prices are realistic. The offered sales prices do not reflect market value until they sell, and in buyer’s markets, for example, most sell for a lot less.
Pending sale homes are formerly active listings that are under contract. They have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale – and many are not – you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving. If your home is priced above the list price of these pending sales, you could face longer DOM (Days on Market).
Homes that have closed within the past six months are your comparable sales. These are the sales an appraiser will use when appraising your home for the buyer, along with the pending sales (which will likely have closed by the time your home is sold). Look long and hard at the comparable sales because those are your market value.
Off-Market / Withdrawn / Canceled
These are properties that were taken off the market for a variety of reasons. Usually the reason homes are removed from the market is because the prices were too high. The median prices of this group will almost al ways be higher than the median prices of comparable sales.
This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.
Examining Comparable Sales
Comparable sales are those that most closely resemble your home. It is difficult to compare a tri-level home to a single-story home. Select the homes from the list that are mostly identical to your home in size, shape, and condition.
- Similar age of construction – Ideally, the age of the home – the year it was built – should be within a few years of other comparable sold homes. Mixed-age subdivisions are common. If your home was built in 1980, say, and the brand new homes up the street are selling for more, you cannot command the same price as a new home.
- Similar amenities, upgrades and condition – Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than a home without a pool. A completely remodeled home is worth more than a fixer. Homes with one bath are worth less than homes with two or more baths. Deferred maintenance will count against you.
- Location – Everybody knows that real estate is valued on “location, location, location”, but have you considered what that means? A home with a view of the city, for example, is worth more than a home facing a cement wall. Compare your home to those in similar locations. Since a buyer will most likely stay in the home purchased for three years or more, location is very important.
Your home may be worth more than you think!
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