What is a Comparative Market Analysis? - YouTube

So, what's a CMA? A comparative market analysis,  often referred to as a CMA, is a real estate  

agent's professional estimate of your home's  value based on recent sales of similar homes  

in the same neighborhood. A CMA is useful for  sellers to determine a list price for their home  

and helpful for buyers when submitting an offer  to purchase. The key to an accurate CMA is finding  

comparable sales, known as comps, that are as  similar as possible to the home being valued.  

Unless the subject property is in a cookie-cutter  neighborhood with identical floor plans and  

features, finding good comps can be challenging.  A good real estate agent will use the details  

and photos in the multiple listing service and  in the tax records to identify both public and  

non-arm’s length transactions. This way they  find the most accurate sales. Properties that  

are the same type and that are within 15 percent  of the square footage of the home being valued.  

Comps must also be similar in terms of the  number of beds and baths, the year built,  

the type of construction, the lot size, and the  overall condition. Adjustments may need to be made  

to increase or decrease the sale price of a comp  to account for home features. For example, if the  

subject property has a pool, but the comp being  used does not, the agent would add the average  

value for a pool in that neighborhood to the comps  sale price. This is where your agent's knowledge  

of the neighborhood makes a world of difference.  There is no standard adjustment for a pool,  

your agent will need extensive knowledge  of your market to adjust accordingly.  

Agent experience is also critical in determining  the geographic area that will be covered in a CMA.  

Home values can differ drastically with  the neighborhoods that border one another.  

If the subject property is in a gated community  with an HOA, it is best to stay within that  

community. The closer to the subject property the  better, but a general rule of thumb is to stay  

within half a mile from the property in the same  city and school district. However, if the home  

is located in a rural area, the agent may need to  go much further to locate relevant comps. Another  

important consideration in finding good comps  is the sale date. The more recent the better,  

especially in a changing marketplace. Ideally  there will be enough recent sales that your agent  

will only have to go back three to six months.  However, if there haven't been a lot of sales in  

the neighborhood, your agent might need to look  at sales over the past year. Only properties  

that have closed, not those that are for sale,  can be used as a true comparable. However, it's  

a good idea to look at active listings to check  that you are pricing the property competitively.  

Listings that are pending, meaning they  have gone under contract with a buyer,  

but haven't closed yet, can also provide useful  information. No one knows the price a house under  

contract will sell for until the transaction  closes but looking at how many days it took the  

property to go under contract at the list price is  useful in determining a competitive market price.  

Once your agent has located 4 to 10 comps  and has made adjustments for home features,  

you will be provided with a range of market  value included in your full CMA report  

so you can make an educated decision  to price your home for sale.  

Remember, a CMA is not the same as an appraisal.  An appraisal is conducted by a neutral third party  

that is licensed by the state. If you receive  a finance offer on your home, the lender will  

order an appraisal to ensure that they are not  issuing a mortgage that is greater than the  

market value. Oftentimes, cash buyers will order  an appraisal for their own peace of mind as well.  

While the process for a CMA and an appraisal are  similar, an appraisal provides a more detailed  

analysis. Click the link below to download our  comparative market analysis guide. If you would  

like a licensed real estate agent to provide you  with a free CMA on your home, head on over to  

the home valuation tab at Real-ativity.com  - your site for intelligent real estate.