If you’ve looked into listing your property before, you may have heard someone use the term “CMA” or “Comparative Market Analysis” regarding the value of your property.
Let’s dive into what that actually means —
When you’re listing your home, you want to make sure that the price is fair. To do this, you need to know how much your home is worth compared with similar homes on the market. This is where a comparative market analysis (CMA) comes in. A CMA is an estimate of the value of a property based on a comparison of similar properties in the area.
The agent will find properties that have sold recently in your area to help determine what your home should be listed for on the market. The price you list your home at will affect whether or not you get offers on it, so this is important information!
There is certain technology that can do this now as well. “Zestimates” by Zillow are a great example of automated CMAs generated by data listed on the Zillow.com website.
What does a comparative market analysis factor in?
A comparative market analysis will factor in things such as:
- The location of the property, such as an address or neighborhood.
- The size of the property, measured in square footage.
- The condition of the property, including cosmetic issues like paint color and flooring materials.
- Features unique to your home, such as a finished basement that could add value but also might need additional work before you can sell it. If you have any other features worth noting (pickled pink flamingo wallpaper in one bedroom?), be sure to include them here!
- Comparisons with similar properties in your area, including their age and size as well as recent sales prices and listings. If there aren’t many comparable homes on the market right now because they’ve been sold recently or aren’t available yet (or maybe they’re all just way out of budget), consider using average values based on past listings instead—just make sure these are accurate!
In addition, the CMA will factor in current market conditions.
For example: If you’re thinking about selling your house in an area where prices have been volatile, you’ll want a CMA that includes recent sales data limited to within the last few months—not five years ago!
With all of this information together, the agent is able to estimate the fair market value (FMV) of your home.
How accurate are comparative market analyses?
Comparative market analyses are typically very good at determining what a property is worth and should be listed for. That being said, it is not 100% accurate, especially if you are selling a unique property. However, despite the potential minor inaccuracies, they can still help you decide what to do with your home by giving you an idea of how much it will sell for.
What is the difference between a CMA and a home appraisal?
If a home appraisal is a formal assessment of the value of your home, then a comparative market analysis (CMA) is an informal estimate. A CMA can help you understand what your home is worth when you’re deciding to sell. It’s not the same as an appraisal, which is an official document that provides evidence of authenticity and also helps determine property tax values for local governments.
A CMA isn’t necessarily accurate in all areas, but it can give you a general idea about how much money buyers are willing to spend on homes like yours in the area where it’s located. If other houses near yours are selling for more than what they originally cost or have recently been renovated, this could mean there’s potential for higher profits if yours gets sold too—but if they’ve been sitting on the market awhile without much activity happening around them either way (i.e., no renovations), perhaps there isn’t any demand at all right now?
Final Words
If you are ever curious about what your property may be worth in the current market, you can always ask your agent to run a “CMA” for you and send over the results!
