Before putting your home on the market, you need an idea of what people will actually be willing to pay for it. You may have heard your realtor talking about a “CMA”, but they often fail to explain what this really means. A CMA or “comparative market analysis” is used to give the seller a range of reasonable, realistic prices to list your home at on the market. These are also helpful for buyers as they can prove if a house is listed at a fair price.
A CMA will come in the form of a report done by your Door agent, or any real estate professional. Luckily, they are usually free of charge! Your real estate agent will look at the sold property records for the area in which you plan to sell your house and compare your home to those listed in the database. They will research which homes are selling at what prices and how long they take to sell. An estimate of value will be suggested to the homeowner which should be used as a reference price.
The comparative market analysis is often confused with an appraisal, but they are not the same. An appraisal is done by a licensed real estate appraiser to calculate the fair market value of a home. It is used by lenders, local governments, or whenever an unbiased estimate of a home is needed.
Real estate agents will often talk about “comps” when discussing a CMA. “Comps” or comparable listings are the houses similar to yours that are used as a reference point in pricing. Homes with similar floor plans, ages of construction, school districts, etc. are preferable as they can provide the most accurate estimate of value for your home. The more similarities, the better!
Comps are chosen by looking at active listings, properties that have sold in the past year, pending sales and expired listings.The prices of expired listings, or houses that never actually sold, is a good way to tell which prices are too high for your neighborhood at a given point in time. The prices of houses under pending sales are usually the most accurate as those are the ones that are listed and are now under contract.
Obviously, finding a “comp” that is exactly the same as your home is extremely rare so adjustments have to be made. The price may increase if you have a pool, extra bedrooms, garage, recent renovations, or any other extra amenities. It can also decrease accordingly in the absence of some of these features. Click here to see 10 low-priced home improvements that help sell homes. It is helpful to have a real estate agent for this step as they have experience with how much value should be added or subtracted for differences between your home and a comp.
Knowing how a comparative market analysis works is a good way to stay on top of the real estate game. Pricing your home correctly is one of the most important decisions you will make when selling your home, and a CMA can ensure that you will have a realistic and calculated value that will get you the best results! Lucky for you, Door’s agents are 98% price accurate - meaning we have correctly priced our clients’ homes to sell an outstanding majority of the time.
Still have questions? Eager to have a Door agent perform a CMA on a home you are preparing to sell? Get in touch with us, and a Door agent can begin helping you right away!