Comparative Market Analysis (CMA)
Obtaining an accurate value for real property is difficult and requires the skill of a trained professional. Before listing your home for sale be sure your chosen agent has the knowledge and experience to be able to provide you with a comprehensive Comparative Market Analysis, also referred to as a CMA.
A CMA is an extremely valuable tool for those seeking to sell their home and you can count on the Adkins Florida Group to prepare an accurate CMA, which will not only present a true picture of the real estate market but will also generate an accurate value for your home.
To have a professional CMA prepared for your property, free of charge and with no strings attached, please contact us.
So, what is a Comparative Market Analysis?
A CMA is typically a short list of recent comparable home sales, for starters, or it can be complete and comprehensive guide to your homes’ value. The length and complexity of the report depends on the needs of the client and the availability of meaningful data. However, a standard CMA report contains the following information:
Homes that have closed within the past six months are your comparable sales. These are the sales we will use when preparing a CMA for your home, along with the pending sales (which will likely have closed by the time your home is sold). We will look long and hard at the comparable sales because those are the back bone of your market value.
Active listings are homes currently for sale. These listings matter only to the extent that they are your competition for buyers. They are not indicative of market value because sellers can ask whatever they want for their home. It doesn't mean any of the prices are realistic. The offered sales prices do not reflect market value until they sell, and in buyer's markets, for example, most sell for a lot less.
Pending sales are formerly active listings that are under contract. They have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale, and many are not, you will not know the actual sold price until the transaction closes. However, pending sales will indicate the direction the market is moving. If your home is priced above the list price of these pending sales, you could face longer DOM (days on market).
Off-Market / Withdrawn / Canceled
These are properties that were taken off the market for a variety of reasons. Usually the reason homes are removed from the market is because the prices were too high and thus no interest was shown from potential buyers. The median price in this group will almost always be higher than the median price of comparable sales.
This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.
How do we Examine Comparable Sales?
Comparable sales are those that most closely resemble your home. It is impossible to compare a 2/2 water-front condo on Anna Maria Island to a 5/4 golf course home in Lakewood Ranch. So to overcome these inherent differences we select homes that are mostly identical to your home in size, shape, condition and location.
Appraisers compare homes based on square footage. Larger square-foot homes are worth less per square foot than smaller square-foot homes. The variance among a group of median-priced homes ideally should not exceed more than 200 to 400 square feet, plus or minus.
Age of construction
Ideally, the age of the home - the year it was built - should be within a few years of other comparable sold homes. Mixed-age subdivisions are common. For example, here in Bradenton a subdivision may consist of homes built in the 1950s, and then just across the street they jump a couple decades to the 1970s. Although the homes are located next door to each other, the homes loaded with character from the 1950s may be selling for more than their newer cookie-cutter counterparts. If your home was built in 1980, say, and brand new homes up the street are selling for more, you cannot command the same price as a new home.
Amenities, upgrades and condition
Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than a home without a pool. A completely remodeled home is worth more than a fixer. Homes with one bath are worth less than homes with two or more baths. Deferred maintenance will count against you.
Everybody knows that real estate is valued on "location, location, location," but have you considered what that means? A home with a water view, for example, is worth more than a home backing up to a commercial development. Homes located on busy thoroughfares are worth considerably less than homes on quiet streets. Compare your home to those in similar locations. If your home sits across the street from a power plant, look for other homes with power plant exposure or those located along railroad tracks, among other undesirable locations. Some Information from about.com
When all the above information is compiled and studied a true picture of your situation becomes clear and an accurate pricing point for your property can be determined.