What is a CMA?
A Comparative Market Analysis or CMA is a term real estate agents use when they conduct an analysis of a home's worth in today's market. Pricing too low will cost you money, and pricing too high will lose you buyers. The best part about a CMA is that it is usually free! Real Estate agents advertise Free CMA's with the anticipation that they may be given the opportunity to sell your home if and when you decide to put your home on the market.
How's it done
Getting a CMA is a three step process:
Step One - A Sales Agent will tour your home taking notes and pictures. The home does not have to be in perfect condition. However, property condition does reflect the price; so if you plan on doing any repairs or upgrades, let the Sales Agent know. Some Sales Agents will even offer tips or suggestions, or recommend improvements that will increase the home's value.
Step Two - The agent will research information about comparable properties in the area, using an industry resource called MLS. This information includes:
- Properties that have sold recently (usually 3 months)
- Active listings (properties currently for sale)
- Pending sales (propertied that have offers on them but have not yet completed)
- Expired listings (properties that did not sell during the listing period)
Step Three - The final step is the coming to terms with the suggested sale price. Factors like age, style, property size, and physical conditions can make the comparison come to a range instead of a fixed price. This is quite common in CMA's because no two homes are the same. The agent may give a price range such as $250,000 to $275,000 instead of a fixed price like $262,000 due to the above factors. The experience of the Sales Agent and the comparables available may also factor in on the pricing.
What to Expect
A completed CMA is presented in the form of a report, which includes the selling price, detailed information about your home, and the comparable properties that were used to determine market value. Because the price derived from a CMA is subjective, some agents may include a brief statement on the perceived selling points of your home.
Note: A CMA is not an Appraisal
A Real Estate Appraisal is a comprehensive evaluation performed by an independent licensed appraiser. With a CMA, the agents experience in the business and the knowledge of the local market can affect the accuracy of the report. Typically a CMA prepared by an experienced agent with good knowledge of the local market is right in line with your home's appraised value.