Comparative Market Analysis (CMA) in Real Estate: What It Is and Why It Matters
When attempting to determine the cost of a piece of property, it can be a complex process due to the numerous factors that contribute to its value. To maintain an unbiased approach, real estate agents should look into a comparative market analysis, or CMA, to gauge the cost of the property based on similar nearby sales.
The CMA technique is useful for setting reasonable expectations when it comes to selling a property, and averting any misunderstandings between the agent and client. Furthermore, it can also assist the agent in becoming more knowledgeable about the local market. To find out more about CMAs and why they are significant in real estate, continue reading.
What is a CMA in real estate?
When attempting to ascertain the worth of a house, a CMA (Comparative Market Analysis) is often employed to evaluate the asking price by comparing it to other properties in the vicinity that have sold recently. Apart from size and location, also take into account the age, state of repair, and any features that make it special, like a swimming pool, etc.
Why do you need a CMA in real estate?
The services of a Certified Real Estate Agent (CMA) are necessary in the real estate industry, as it helps to avoid situations where a property is priced too low and the owner incurs a loss, or too high and no offers are received. A CMA assists in determining an appropriate cost for the region, enhancing the chance of a successful sale. The client can then make their property the top choice in that price range through various improvements. From the purchaser’s point of view, a CMA also verifies if the vendor is looking for a reasonable cost.
What’s in a CMA real estate report?
Real estate agents need to be very thorough when they compile a Comparative Market Analysis (CMA) report; they should obtain the data from the MLS. The CMA should include details of at least three comparable sales that have taken place in recent times. As well as the features and dimensions of the property being evaluated.
Similar sales
The report should include information about the sale prices of recently-sold comparable homes in the area.
If there aren’t enough comparable homes sold in the area recently, the agent can use a relatively similar area based on factors such as schools, crime rate, etc.
Listing length
It’s helpful to add the time each property took to sell after listing 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.
