Setting the right price from the start is among the most important steps toward successfully selling your home. This requires taking a close look at what other houses are selling for so that you can determine the relative value of your property. One of the key ways to compare your house to others on the market is to look at a Comparative Market Analysis, or “CMA.”
What Is a Comparative Market Analysis? Although reports can vary, standard Comparative Market Analysis reports tend to contain the following information:
are homes currently for sale. These listings matter only to the extent that they will be your competition. They are not indicative of market value because sellers can ask whatever they want for their home.
are formerly active listings that are under contract. They have not yet closed and so they are not yet a comparable sale, you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving.
are homes that have closed within the past three to six months and are your comparable sales. These are the sales an appraiser will likely use when appraising your home for the buyer, along with the pending sales (which may have closed by the time your home is sold). Study the comparable sales very closely because they are your market value.
Another function of comparable sales is that if chosen correctly, it will most closely resemble your home. For example, it is difficult to compare a tri-level home to a single-story home. Therefore, you must select homes that are mostly identical to your home in size, shape, and condition:
Similar square footage
Similar age of construction
Similar amenities, upgrades, and condition
Similar location (Location, Location, Location)
Sellers will use a “CMA” to figure out home pricing in preparation to the listing. As a matter of fact, you have probably received direct mail letters or postcards from local real estate agents about Comparative Market Analysis. These posts oftentimes offer you a free report to tell you how much your home is worth.
Finally, where can you get the most accurate Comparable Market Analysis for your home? Henry Ford once said that it proves that you’re smarter than they are when you hire people who are smarter than you.