What is a CMA and Why Do You Need One?
A Comparative Market Analysis or CMA is a report prepared by your real estate agent, which provides data comparing your property to similar properties in the marketplace. There can be many variables including – the radius of the search for the report, the days that properties have been on the market since being listed or the number of days they had been listed at the time they were sold (CDOM), similar features of the homes, prices per sq. ft., and other factors.
First your agent will need to inspect your property. Generally, this inspection won’t be overly detailed, and you won’t need to have the house totally cleaned up and ready for an open house. The home should be in such a condition that the agent will be able to make an accurate assessment of its features, condition, and worth. If you plan to make changes before selling, inform your agent at this time. He or she can then apply this information to his selection of variables for your market analysis. At this time, he or she can recommend relatively inexpensive changes that will enhance the appearance of your home before placing it on the market.
Your agent will select data through the local Multiple Listing Service (MLS) on comparable properties listed, bought, and sold within a certain time frame. A qualified agent will also know of properties that are on the market or have sold without being part of the MLS. These analyses will give your agent a good indicator for how much your property is worth in the current market. You can then make an informed decision together on the selling price for your home. Please note that the CMA is not an appraisal. An appraisal must be performed by a licensed appraiser.
Market analyses are also useful for prospective buyers. Buyers should consider requesting CMA’s for the specific neighborhoods and homes they have chosen to consider. This can help them determine whether or not the asking price and price per sq. ft. for a specific property are true reflections of the current market for that property and in that neighborhood. Your Realtor is best equipped to help you analyze and draw conclusions from CMA’s.
Owners who are contemplating upgrading or remodeling can also benefit from a CMA. The report can be used to determine whether or not their intended changes will “over-improve” their property compared to others in the neighborhood.