What is a CMA and Why Do You Need One?
Determining a suitable list price for your home is one of the most important tasks a listing agent will assist you with. Generally this begins with a CMA.
When a real estate agent says they will be completing a “CMA” on your property, they are referring to a Comparative Market Analysis. A CMA is a detailed market data report prepared specifically for your property.
The CMA process will be completed before your home is listed for sale and should provide you with a reasonable idea of what your home will likely sell for.
The CMA report is created using information about area “comps” (properties which are similar to yours) which have recently sold, are currently active on the market or were recently listed for sale but expired without selling. In the report, adjustments will be made to the price of each comp to account for additional or missing features, upgrades or size discrepancies as compared to your home.
The information provided in a CMA will be very useful in helping you determine an accurate sales price for your home. As an agent, it is my goal to help you get your home sold for the most money possible, in the shortest time possible and with the least hassle possible – and this information can help us do that.
The first step in creating an accurate CMA will involve a quick walk through inspection of your property. This inspection will not take long and need not be extremely detailed. It simply allows us to note specific details about your home (such as special features or upgrades) and assess the overall condition of the property. If you are thinking of making any updates, upgrades or modifications to your home prior to selling, this would be the best time to make us aware of your plans.
Next, we will research several property data sources to obtain information on comparable properties in your local market – including active listings, properties which have sold recently, foreclosures, etc.
Active listings: Tell us what your direct market competition will be.
Sold listings: Tell us what an actual buyer is willing to pay for home similar to yours.
Expired listings: Tell us the price at which a buyer will walk away from a home similar to yours.
The data sources we use include a blend of multiple listing services, tax records and other market trending databases. Additionally, to further enhance the accuracy of our CMA, we utilize a private data source used by many lenders to create a “desktop appraisal” report. This report provides us excellent insight into how a mortgage lender will likely evaluate your property’s value.
The sum of this information will provide the agent an accurate estimate of what your property is worth in the current market. This will be presented to you in the form a “pricing range”. (More aggressive pricing for those in need of an immediate sale – less aggressive pricing if time on the market is not an issue.)
Not only is a CMA important in terms of pricing your home for sale, but buyers often request that their agent complete a CMA on any property they are seriously considering making an offer on to verify that the asking price accurately reflects the current market value.
A CMA is not an appraisal. An appraisal must be performed by a licensed appraiser. You have the right to have a pre-listing appraisal completed on your property by the appraiser of your choice if you feel the value is in question. If the homebuyer is seeking a loan to purchase your home, the buyer’s lender will require one to be completed by an appraiser, sanctioned by them, prior to loan approval.