Comparable Market Analysis
Beware "drive-by", "online" or "over the phone" methods of evaluating your property. A well researched, professional CMA is best way to ensure accurate pricing.
A CMA shows what similar homes have sold for recently. They should be of similar size, age, amenities, quality of construction, and area.
While some CMAs also include what is currently on the market for sale and what has expired, most consideration should focus on the sold properties. Appraisals don’t give any weight to what is currently on the market, only what has sold and closed.
Average square price is a benchmark but not a number that can be arbitrarily multiplied by the square footage of the subject property. In a given area, a home larger than the average will have a lower per square foot value.
Homes smaller than the average in the range will have a higher per square foot value. This is due to having to spread the common cost of the main systems in a home such as kitchen, roof, HVAC, plumbing, etc.
Average number of days on the market is an important item to concentrate. If a trend can be identified that the days on market are increasing, it could indicate that there is beginning to be an over-supply of homes which could mean a softening of the market and slowing of appreciation.
Real estate agents developing a CMA for a property have the same information to draw from which is generally the Multiple Listing Service but sometimes includes other sources such as company sales and independent sales that the agent is aware.
If the property will compete with the new homes that are being built in the area, it is important to know if they were considered in the comparables. Some MLS’s don’t have that data available.
The seller sets the price of the home… |