What’s A Comparative Market Analysis (CMA)

By definition, a comparative market analysis is a tool utilized in the real estate industry to accurately determine the value of your home. This valuable resource incorporates current trends within the housing market, ensuring a reliable estimation of your property’s worth.

In essence, when evaluating your home’s value, it is common to initially consider factors such as location and square footage. However, CMAs go beyond these aspects by examining various elements and comparing them to similar properties in your area.

A CMA provides valuable insight into determining a fair listing price for your property or, if you’re currently in the process of purchasing a home, it helps you gauge an appropriate offer that is competitive in the market.

CMAs vs. Appraisals

The differences between a CMA and an official home appraisal – another method of evaluating your home’s worth – can sometimes appear unclear. Allow me to clarify these distinctions for you.

To put it simply, a CMA offers a broader and more informal assessment of a home’s value, while an official home appraisal is a more formal process requiring advanced scheduling.

Moreover, since CMAs can be conducted remotely, some real estate agents might even provide a free mock-up for your convenience.

The Difference

CMAs are a valuable pricing tool for home sellers, while home buyers typically rely on appraisals to determine property value. Appraisals are especially important during the lending process, unlike CMAs which are not mandatory.

In most cases, sellers collaborating with real estate experts may not be involved in the intricacies of the CMA process. However, it is worth noting that CMAs can be comprehensible even without professional guidance, as they require a decent understanding of the local housing market.

How Does One Do A CMA?

If the concept of CMAs leaves you feeling intimidated, rest assured that you are not alone. A simple online search reveals countless images of graphs, charts, and an overwhelming amount of numerical data.

There are numerous intricate aspects involved in conducting a CMA on your own, but fear not, that’s why there are professionals to help.

Find Your Comps

As we discussed earlier, real estate experts start their CMA process with finding comparable sales properties.

Using an online listing site of your choice, look for homes that can compare to your property. When comparing a potential comp to your home, you’ll want to look at eight different components:

• Location and lot size
• Age and condition of the property
• Square footage
• Number of bedrooms and bathrooms
• Any extra features
• Date of the sale
• Terms of financing and sale

Each of these components and more plays a vital role in determining the value of your comparable sale.

To simplify your search, it is crucial to find properties that closely resemble your own.

Do Some Poking Around and Research

To gauge your area’s market, you may want to conduct some light research.

To do so, consider looking at some local real estate data.

This can include:

• Your area’s average home selling price
• Recently sold homes in your area
• The value increase of homes in your area since the time you purchased your home

Being knowledgeable about this information can greatly enhance your understanding of possible listing prices and enable you to identify reasonable offers in the future.

Adjustments

The next step in conducting a CMA is to consider the special features in your home that may contribute to its value, such as fireplaces, updates, and additions.

While it is not guaranteed that you will recoup the full investment on these features, they undoubtedly enhance the worth of your property.

Ok now go double check all that information

Sound like a lot of work? Better call in an experienced broker and attorney to represent your interests in your for sale by owner transaction. They can save you a lot of time, money and legal issues in the end.