Understanding the Comparative Market Analysis

The following article is an excerpt from my monthly e newsletter, Life @ Home, which I send to clients, friends, and networking acquaintances. The newsletter is just one page long and contains helpful information on buying, selling and owning a home, as well as some other short helpful tips. If you would like to subscribe to this newsletter, just drop me an email and I will add you to the distribution list.

As the old saying goes, “Knowledge is power.” This adage can certainly be applied to the real estate transaction. The more you know, from the ins and outs of the process to the market conditions, the better your chance of selling and getting the most from your investment.

The Competitive Market Analysis or CMA is a report that will help you learn more about your marketplace. Many real estate professionals offer this free service or as part of their service package. A CMA offers you a snapshot of the real estate conditions in your area and can be a very useful tool when setting your own asking price.

Here are some of the elements contained in most reports:

1. Homes for sale. This is an inventory of the current active listings in the Multiple Listing Service (MLS). It will give you an idea of how many other homes will be competing for buyer attention. Consider the asking prices for homes similar to yours, but remember the asking price is just that. It does not reflect what buyers are willing to pay.

2. Pending sales. These are active listings that are now under contract. Additional data on the sale will likely not be available until after the closing.

3. Comparable sales. This is perhaps the most revealing and interesting component. It details all the sold listings in the last six months and their sale prices. Look carefully at the numbers. Here you can discover how much buyer’s are willing to pay. This data can help you and your agent craft a realistic list price.

The final piece of the CMA puzzle is to make sure you look specifically at homes that are similar to yours. To make the most of this data, search for a home that is comparable to yours in location, size, age, amenities, etc. Use the expertise of your Realtor® to analyze the numbers and his or her market knowledge to adjust the numbers up or down accordingly.


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