What is a CMA in Real Estate? Learn How to Use it to Set Prices and Become an Expert in Your Market
Assisting clients in determining the selling price of their property can be challenging as several variables contribute to or detract from its value. To avoid subjective opinions, it is recommended that real estate agents employ a comparative market analysis (CMA) to establish pricing based on comparable sales in the local market. Utilizing a CMA not only assists in setting realistic expectations for selling a property but also establishes the agent as a market expert. Further details on the importance of CMAs in real estate can be found below.
What is a CMA in real estate?
A CMA is a tool used to estimate a property’s value based on recent sales of similar properties in the area.
While it’s common to take square footage and location into consideration when pricing a home, other factors, such as the age and condition of the home and unique features, such as a pool, can affect the home’s value.
Why do you need a CMA in real estate?
In real estate, CMAs play a critical role as they determine the optimal price range for a property. It is important to avoid undervaluing the property, leading to loss for clients, or overvaluing it to a point where it receives no offers. By conducting a CMA, a reasonable price range is identified, increasing the likelihood of a successful sale. Furthermore, this range allows clients to enhance the attractiveness of the property by making it the best option in that price bracket. Additionally, buyers can use CMAs to assess if the seller is asking for a fair price.
What’s in a CMA Report?
To generate a real estate Comparative Market Analysis (CMA) report, agents meticulously extract data from the multiple listing service (MLS). The CMA should comprise at least three comparable recent sales, along with details about the dimensions and attributes of the property. No details should be left out while preparing the CMA.
Similar sales
The report should include information about the sale prices of recently-sold comparable homes in the area.
The agent can use a relatively similar area based on factors such as schools, crime rate, etc if there aren’t enough comparable sales in the area recently.
Listing length
It’s helpful to add the time each property took to sell after you list it.
Price changes
List the starting prices of the properties and the final selling prices.
The low, average, median, and high selling prices can give context to a property’s value.
Size of home
The square footage for living space and the lot size can add to the home’s value.
Age, condition, and special features
Newer homes and recently renovated homes often sell at a higher price.
When homes have additions such as pools and fireplaces, they increase the home’s value.
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