What Exactly is a Comparative Market Analysis (CMA) and why do I need one?
Known in the real estate business simply by its acronym, a CMA is a powerful tool that rounds up similar properties in your area to help determine your home’s value.
Since no two homes are the same, a well-executed CMA is equal parts art and science, comparing raw data, such as your square footage and home address, with the less tangibles, like your home’s proximity to noisy streets. It’s an absolute essential when nailing down an initial asking price, and important for buyers making offers, too.
Your realtor will prepare a CMA by examining several properties that are comparable to your own home in location and size to figure out an appropriate asking price. Getting a CMA from your realtor is often one of the first steps you’ll take in listing your property.
The importance of pricing your home right the first time can’t be understated.
There are obvious downsides to listing a property too low, but too high can be detrimental to the selling process. Buyers will often conduct their own CMAs and will be able to easily spot an incorrectly priced listing. This could result in your home sitting on the market longer than is needed and thus causing even fewer buyers taking an interest as time goes on.
What Makes A Good Comparative Market Analysis?
The Comparative Market Analysis Starts With Location, Location, Location
The most important step in a CMA is accurately defining your neighborhood. One common mistake is drawing a perfect circle radius around your home, but that’s not always the most accurate approach. If you go across a set of train tracks or even over a few streets, it’s easy to see that often the homes or area is priced very differently. Your realtor can always explain why this may or may not be the case.