When a seller is ready price their home, a realtor will generate a comparative market analysis (CMA) in order to get a better view of the local real estate market.
What is a Comparative Market Analysis?
A CMA is an “examination of the prices at which similar properties in the same area recently sold.” The CMA is invaluable for letting sellers know how many homes in the area sold, along with what they were listed and sold for. Other information is included such as:
- Size of property and lot
- Average price/lot price per square foot
- Time property spent on the market
- Which realtor sold the property
- Age and condition of the property
- Upgrades to interior and exterior
Why a CMA is Needed
When looking to sell a property, a CMA is invaluable to setting the best price. The report will show data from recent home sales in your area and can even give a detailed analysis of market trends in the neighborhood. This data allows you to set a price for your home that is low enough to entice buyers but high enough to give you enough room to get an acceptable or greater return.
Factors Considered in a CMA:
When the custom market analysis is complete, it will show four different types of items.
- Active listings – This shows you how many other homes in the area are for sale, as well as their price, how large the homes are, how many days they have been on the market, etc. The prices of active listings may not be indicative of the home market but can tell you what other buyers have seen.
- Pending listings – These are homes and properties that were for sale but have an offer pending and may be back on the market if the sale does not go through. This information is also important because it tells you what price was accepted.
- Sold listings – Another important piece of data, sold listings are concrete evidence of what homes will sell for, how long it took to sell them, and more.
- Off-market listings – These are properties that were for sale but have been taken off the market permanently for any reason from foreclosure to the seller never receiving their asking price. This data is useful for buyers and sellers to get a feel of the homes in the neighborhood, as well as if they are in demand or being abandoned.
Why You Need a Realtor to Get a CMA
Just about all data on home sales is often hidden from the public and can only be accessed by a licensed real estate agent.
Another important reason to have a realtor create a CMA is to ensure that the most relevant data is gathered in addition to the benefit of having an expert explain it all.