CMA or comparative market (CMA) analysis isn’t actually math to conclude with figures and numbers. What would it be then? Read the full article to know more.
There are two instances where Comparative Market Analysis (CMA) comes in:
- When assisting the sellers to fix a price for the listing
- When helping the buyers to get the real value of a house to buy
So, what is this CMA is all about? Before checking out this, you can also have a rough idea about property listing and its advantages here.
CMA – Definition
CMA or Comparative Market Analysis is the more realistic assessment of the value of a house in the locality. This is done by expert hands in real estate known as real estate agents. Also, this estimation is done by analyzing the local trends and listing price. The real estate agents keep a record of those projects which are listed for sale, already sold, etc, to predict the probable price while selling your home.
Real purpose of CMA in Real Estate
Suppose you are out for a home hunting. You want to land in the best available home provided that there is no compromise on the prices. And you are much familiar with the quote, ‘real estate is local’. So, obviously, you should be well informed about the local real estate trends, listing price and many more. CMA by definition is analyzing the local market for determining the value of a property by considering a few factors. Also, this task is normally performed by real estate agents.
There are many ‘x-factors’ to be considered while creating a price listing. And, if this listing is done accurately by an expertized real estate agent, then the listing price would be more or less the same as the probable price of selling your home. With CMA, it is actually easier to sell your property at the same time, buy a worthy property in a cost-friendly manner. This also points out that real estate listing is equally important is the comparative market analysis.
Comparative market analysis report
To make a quick attempt to sell your property, Comparative Market Analysis is really helpful. A proper Comparative Market Analysis includes 4 features which ensure the success of the sale. It also helps in coming up with a proper price for the property, not more, not less by observing the data from selling similar type properties.
The comparative market listings
Now, let us check the 4 ‘x-factors’ in CMA.
1. Active Listing
Active Listings are those which are presently available for sale in the market. These are similar projects and are in fact the competitor projects. By checking on the listing prices of these projects, real estate agents will get a proper idea of the probable selling price of your home. But these might not be 100% true as none of the properties get the same price as the listing price on sale.
2. Sold Listings
This is the 2nd ‘x-factor’ in Comparative Market Analysis. It contains all details about the properties which are sold within the past 6 months of time. This also has all data right from the listing price to the selling price. Also, the properties which are similar to yours is used for determining the listing price while selling your home.
3. Pending Listings
Pending listings come neither in the active listings nor the sold listings, but those which are under contract. To be more precise, these properties are not available in the active listing, yet not a closed deal too. Thus, these types of listings can’t be used for comparison until the sale is done.
4. Expired Listings
Some properties will no longer be available in the listings. They might be taken off from the listing due to many reasons, may be due to the irrational prices, etc. So, real estate agents always make sure that none of their properties fall in this list. Before selling your home, going for a repair checkup is also part of the same. Thus, it ensures that the project is completely fine and can go for a reasonable price in the market.
Steps to create an accurate CMA
Now that we are much familiar about the term Comparative Market Analysis or CMA, let’s read on steps to create accurate CMA. These are the steps real estate agents follow while drafting a CMA to sell your property quicker and easier.
Keen look into the neighborhood
The first and foremost thing to check while buying a home is its neighborhood. This is true while doing the listing price and creation of CMA too. Before creating the listing price, analyze the location, its proximity to infrastructural services, social services, etc. Also, look for transportation facilities, since each of these adds to the value of a property. That is why it is a crucial element in Comparative Market Analysis.
Assessing the original listing (If Available)
Also, make sure to assess the original listing if it is available just to check on the condition of the home. This will surely help in selling your home quicker since you will get to know about the recent upgradations, the maintenance problems, etc. Also, this will point into the problems of the previous listing, which you can prevent from repeating.
Research property value estimates
Overlooking the property value estimates helps in determining the market price for your property. Thus, it gives an average listing value for your project. Moreover, it helps in deciding the cost per square feet of the property.
Go for a preliminary CMA
The next in the list is creating a preliminary CMA. This not only helps in determining the value of a property but also gain knowledge into the other minute details. Comparing the property for sale to neighboring houses of same sq ft or under same schooling zone can help evaluate the value. Similarly, it is equally important to check out the 4 listings prior to the listing of price. The active listings will help you compare, whereas the sold will help you to analyze and expired will save your property from being in that list.
Get the average price
Getting the average price in a locality for a particular type of housing is important in CMA. The easiest way is to get the average selling price of each of these comparable homes. Divide it then by sq ft area. So, then you will get the price per sq ft. Now, you can use this data to multiply your property’s sq ft and determine the average price.
Self assessment of the Home
More than anything else, going all by yourself and analyzing the home is important. To ensure, everything is in proper condition is important while checking. If not, make sure to do all the things prior to the selling process for quick selling of your home.
So far, we have come from what CMA is to how to create an impressive CMA. Though it isn’t always possible to determine the exact price of a house, CMA helps in bringing the best possible result. Comparative Market Analysis will for sure provide the price much close to the actual price and helps in easy returns in real estate marketing.