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Comparative Market Analysis (CMA) is an evaluation of similar, recently sold homes (called comparables
or comps) that are near a home or homes that you want to buy or sell. Buyers,
sellers, or real estate agents perform a CMA report to establish and find a
fair price range for the home the report is created for. The price range from
the CMA can then be used as a guide to be used for establishing an offer price
or a listing price.
Basically, performing a CMA involves finding the homes that are similar to the
home under consideration, and creating an in-depth comparison of its size, age,
location, and features of the home. It all comes down to one question: compared
to other, comparable homes in this area, how much is this home worth? Answering
that question involves looking at a fair amount of data on other homes in the
process for doing a comparative
market analysis includes:
analysis reports contain the following data:
Active Listing- 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 Listings- 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.
Sold Listings- 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Off-Market / Withdrawn / Canceled- These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 always be higher than the
median prices of comparable sales. However, listings cancel also for
the following reasons:
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 this list that are mostly identical to your home in size, shape and condition,
Similar square footage
compare homes based on square footage. Larger square-foot homes are worth
less per square foot than smaller square-foot homes. The variance among a group
of median-priced homes ideally should not exceed more than 200 to 400 square
feet, plus or minus.
Similar age of construction
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. For example, a
subdivision consists of homes built in the 1950's, and then they jump a couple
decades to the 1970's. Although the homes are located next door to each other,
the homes loaded with character from the 1950's sell for more than their newer
Brady Bunch counterparts. If your home was built in 1980, say, and 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
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.
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. Homes located on busy
thoroughfares are worth considerably less than homes on quiet streets. Compare your
home to those in similar locations. If your home sits across the street from a
power plant, look for other homes with power plant exposure or those located
along railroad tracks, among other undesirable locations.