Comparative Market Analysis (CMA) - The Definition
The process of selling your house begins with a Market Analysis carefully prepared by a local agent. Take your time looking over all the information and understanding where your home best fits in. Some of the properties included may be a little smaller or larger than yours; some may be more or less expensive. Pay attention to lot size, garage size, bedrooms, baths, basement etc. as well as the number of days the listing was on the market (DOM). Well done, it is a very accurate representation of your home's current worth but, in a fluid market, even six months can make a noticeable difference in price and render the market analysis moot.
While the definition for terms like active, solds etc. may appear to be self-explanatory, below, I explain in detail the information you can glean from knowing what the labels mean.
Generally speaking, a Comparative Market Analysis (CMA) report will contain the following data:
Active Listings: True to their name, these are the listings that are currently available in the marketplace. Being aware of them is useful in terms of knowing your competition but, they don't give you very much information in terms of selling price. A homeowner is free to put any price tag on his home but there's no guarantee that he will get it. If anything, when your house is priced too high, it will help sell your neighbor's house as the consumer will notice what a great deal he's getting when looking at the competition.
Under Contracts: This is the middle ground between Active and Sold. We will have to wait a little while before we learn the selling price but it does give us some helpful information in terms of knowing the listing price that elicited the offer and the Days on Market (DOM) before reaching this status.
Sold Listings: Concentrate on these as they are your comparable sales but, only the last six months reflect current market value. These are the sales that an Appraiser will use when appraising a home for a Buyer.
Expired/Withdrawn/Canceled: For one reason or another, these properties were taken off the market. Normally, you might assume that the house did not sell because of a too-high listing price; however, there can be other reasons:
- The Sellers decide that no other home can possible compare to the one they already own
- The Sellers received only low-ball offers that they rejected because it didn't yield them enough of a profit to purchase something new in a desired area.
- The property was on the market so long, it became stale. It's taken off for a while to "rest" and will be brought back refreshed at a later date.
- The Seller has refused to make the repairs that surfaced as necessary during an inspection and the contract falls apart.
- The listing has changed hands and is with a new broker.
- The property was listed but then not marketed.
What information are Agents looking for when compiling a Comparative Market Analysis (CMA)?
Essentially, they're looking for similarities to help determine a property's worth.
Style, age, construction, condition, location, amenities and upgrades all come into play.
Unique properties are more difficult to assess.
Comparables paint a realistic picture. No agent is licensed to pick a number from a hat. All data needs to be substantiated for it to be valid.
If you're thinking of selling and would like to know your home's current value, reach me at 516.395.8376. You'll get the service you deserve!