When the thought arises to sell a home, most sellers contact a local real estate agent to provide them with a Comparative Market Analysis or what is known as a CMA. The first question is “what is my house worth?” Many times a seller will contact two or three agents to verify the information and give them a comparison of the data. Understanding the home values of nearby properties that have sold is the first step.
What is a Comparative Market Analysis/ CMA
A Comparative Market Analysis is a report suggesting the most likely sell price of a home in the real estate market. The most likely sell price is what would be considered to be fair market value. At the very least a CMA will include a minimum of 3 homes that are similar to that of the subject home in size, location, condition and function. It is also important that the comparable homes have not sold in more than 6 months from the report date.
Ideally, If we could find 3 identical homes on the same street that sold in the past 6 months, our job as realtors would be easy. Unfortunately, living in New England that rarely happens. When starting a CMA I try to stay with in one mile of the subject property, with the same style home (cape to a cape, ranch to a ranch, etc….), similar year built and square footage no more than 20% above or below the subject properties square footage. Hopefully, I can find 3-10 similar properties, but that is rarely the case. So, then I start broadening my search outside of the one mile radius and maybe not be so strict about comparing the same style home.
Once I decide what properties to use as comparables I will than make adjustments for, bathroom counts, garages, finished basements and so on…. In the final report I will give a suggested sell price with a range of a low to high price range.
As a home seller, it is important to be realistic about your home and price where the “meat” of the support is for your home. It is ultimately the sellers choice of where to price their home.
In a Comparative Market Analysis I will show:
Active Listings- Homes that are on the market that your home will compete with. This will give you an idea of whats moving and whats not. Do not base the price of your home based on active listings. These homes are not indicitive of fair market value as any one can list a home for any price.
Under Agreement Listings- This will give you an idea of what is moving and which way the market may be heading. If you list your home for sale above these prices you will probably be looking at much longer days on market and price changes along the way.
Sold Listings- Sold homes will give you the best sense of where the market currently is for your home. Again be practical and keep the emotion out of your decision making process.
Remember anyone can list a home for sale at any price… but only homes priced properly sell.
A Comparative Market Analysis will give you a range of the most likely selling price as well as how long it may take to sell your property by giving average days on market. As the home owner, it is your decision on where to price the property. Review all data while keeping an objective view. When delivering a CMA I will also look at several averages to see where the CMA lines up. Ill look to see where the average falls for the square footage, a particular style and or room, bed and bath count. Typically you will see a pattern in the pricing.
Beware of “buying the listing”
“Buying the listing” is a practice where an agent will give an over inflated price just to get a sellers home under an exclusive right to sell contract. Once signed the agent will immediately work on price reductions. The data can be leveraged or manipulated to give a home seller hope of a higher sale price than is really there. To avoid an agent “buying your listing” make sure you review all of the data and understand it. This article How Will Your Home Compete lays out a good idea of how you go about choosing comparable properties.
One last piece of advice
Before ever looking at Comparative Market Analysis, decide to choose your agent based upon experience, their marketing plan and their reputation not the agent who give you the highest indicated sale price. Quite honestly, most sellers go with the agent that can tell them they will receive the most amount of money. At the end of the day your home is going to sell for what the general public is going to pay, not what your neighbor thinks the house is worth or not what an real estate agent thinks a house is worth. So review the data, price your house right to begin with and you’ll be far happier!!
Find out what your house was worth, for free!! And visitors please feel free to post your comments, I would love to hear from you!!
This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at firstname.lastname@example.org or call 978-360-0422.
I pride myself in the quality of my work while helping buyers and sellers make dreams come true.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley,Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury