What is a CMA and why is it important?
Establishing a realistic asking price is probably the single most important decision that you will make when you elect to sell your home.
As your REALTORS®, we prepare a Comparative Market Analysis or CMA to help you make an informed decision.
The CMA compares your home to similar properties in your neighbourhood that have sold, are for sale currently, or were listed but failed to sell.
The CMA process takes into consideration the type of home, size of living area, size of lot, number of bedrooms and bathrooms, garage and parking, special features and upgrades, as well as the selling price and date sold (if the comparable has sold), or the asking price and number of days on the market (if the property is currently for sale or failed to sell).
This information is used to compare your property with the others, making adjustments to acknowledge the unique features of your home to determine the Market Value of your property.
What does Market Value represent?
Market Value is the estimated price at which a property should sell if exposed for sale in the open market.
As your REALTORS® , we select a number of homes that have recently been listed or sold in your area. In some cases we may use homes in other areas which are similar in most respects.
To calculate Market Value, we adjust for differences between your property and the other examples in the same manner that a typical Home Buyer would.
Example: When comparing your property to other comparable properties, should one of the comparables have additional features, the Buyer may expect to pay less for your property. Conversely, if the comparable property has fewer features, the Buyer may expect to pay more for your property.
Factors Influencing Market Value
There are many factors to consider when determining the Market value of a home. Two of the most important factors to consider are Supply and Demand. Additionally, the amount of time, referred to as Days On Market (DOM), as well as the degree of exposure it receives are also considerations.
The Danger of Over-Pricing
Over-priced listings are a major reason why some properties do not sell within a reasonable amount of time. If, and when, an over-priced property does sell, the amount is usually less than it could have sold for, had it been realistically priced.
Don't get caught in these Traps:
"If I wait long enough, eventually someone will come along and buy my home at my price"
It may be true that if you wait long enough someone may meet your price, however, this logic fails to recognize that waiting for the market to "catch up" to your asking price may cost you a lot more than you think.
Consider the "lost opportunity cost" of not having cash in hand, and/or not being able to afford what you had intended to buy with the proceeds of your sale because prices have also risen over the time that you've spent holding out for your price.
Don't allow your listing to become Stale-Dated.
Consider the fact that Buyers are well-informed consumers that will ask how long a property has been on the market and may determine (rightfully or not) that "there must be something wrong with the property, otherwise it would have sold by now".
This can result in the dreaded "Low Ball" offer, or your home may just drop off the list of properties the Buyer is willing to consider.
Also remember that your property receives its best exposure during the first two weeks it is on the market. If your property is seen to be over-priced by potential Buyers and area REALTOR®, it is not likely to remain "Top of Mind" which will not deliver your desired result, namely to sell your home in a reasonable amount of time so that you can move on with your plans.
If you're thinking of selling your home in the next 3 months, please give me a call. I would be pleased to provide you with a Free, No Obligation CMA on your home and update you on current market trends.
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