What's a CMA? It's a Comparative Market Analysis normally prepared by a real estate professional for a seller to determine the best price at which to list a home for sale. While not every real estate agent will do one of these CMAs for a buyer as well, they should. It helps the buyer to see how a home is positioned in the market as far as price in comparison to similar homes in the nearby area that sold recently. Here are the major basic steps in creating one:
- The sold prices of homes in the neighborhood or close-by are gathered for the homes most closely resembling the home that's to be sold.
- If the home is a 3 bedroom, 2 bath, 2 car garage home on a quarter acre lot, an attempt is made to select other homes with exactly the same characteristics and having been sold within the last 3 to 6 months in the same area.
- However, it's likely that there will be differences in the homes, such as some having 2 bedrooms, and some having 3 baths or a single car garage. The person doing the CMA adjusts the sold prices of those homes to make them more comparable by subtracting from the sold price if there are fewer bedrooms, baths, etc. Or, if there are more, as a three car garage, the sold price is adjusted by the value of an extra garage space.
- This process gets several homes, hopefully three to six, to most closely resemble the subject home after the adjustments. Then the square foot values are averaged, and this can be applied to the subject home to get a good idea of its value.
If it's a seller, they can then decide at what price to list the home, and if it's a buyer, they can see if the home they like is realistically priced.