As a seller, it’s important to have as much data as possible when it comes time to put your property on the market. This includes a comparative market analysis, or CMA. You may have heard this term before, perhaps when starting to shop around for real estate agents. Many local real estate agents send out direct mail to prospective clients, offering free appraisals on properties. This is an extremely useful tool, because a CMA can help you determine what your house is really worth.
If you are in the process of choosing a real estate agent, you’ll want to ask if they can perform a CMA to help you give you an indication of the value on your home. You can start the process of searching for the right real estate agent by registering your details at LocalAgentFinder. A comparative market analysis can range from two pages to over fifty pages in length, depending on its contents. This report lists comparable home sales and related information to help you formulate a business strategy. You’ll find the following information in most CMA’s:
Current Real Estate Listings
One of the first forms of analysis that goes into a comprehensive CMA is a closer look at any current, active properties for sale. This helps give you and your real estate agent insight into the local competition for prospective buyers. However, take care to note that these prices shouldn’t be used to define your home’s actual market value. The prices listed for other homes were created by those sellers, who can ask for any price they choose. This may not be accurate or relevant to your own property. The true market value of a house isn’t shown until it is actually sold. This could end up being far less than the original asking price, depending on current market conditions.
Pending Sale Listings
In addition to current listings, you can also look at properties pending sale. These are properties which used to be on the market, but are now under contract. They shouldn’t be used as a full comparison tool, since the deal is not yet closed. Although it’s possible to ask the real estate agents representing these properties for further information, they may keep the final sale price under wraps until the sale has fully gone through. However, this information can be useful because it can give you some indication regarding where the market is going. If your own house is listed at a higher asking price than pending sales of similar properties, it could indicate that your property will stay on the market for a longer time period.
Recently Sold Properties
Another indication of which way the wind is blowing is looking at the similar properties to your own which have sold over the past six months. If a prospective buyer decides to hire a professional property valuer to appraise your home, they will take this information into consideration along with any pending sales to make a final decision. Comparable sales can be your most accurate tool when you’re trying to determine what your home’s real estate price is.
Cancelled or Withdrawn Real Estate Listings
There are many reasons why a property might be taken off of the market, but one of the primary reasons is if the real estate asking price was too high to begin with. When comparing the asking prices of homes that have been taken off of the market, you’ll note that the median price is higher than that of comparable sales. The following are a few reasons why someone might cancel their listing:
- Overpriced Property: If a property is priced too high, it could result in a lack of genuine offers except for lowball quotes.
- Too Long on the Market: If the property has sat on the market for too long, sellers may remove the listing and then relist it as a “new property.”
- Change of Real Estate Agent: If the seller has been unhappy with the efforts of their agent, they may choose to fire them and hire a new agent to represent the property. If you have been unhappy with an agent in the past, it’s best to compare qualifications carefully by using free online tools such as the dashboard at LocalAgentFinder.
- A Remorseful Seller: At times, a seller may change their mind due to sentimental or personal reasons and decide they wish to keep their home
- Maintenance Requests: A house inspection by a potential buyer could reveal the need for additional repairs or maintenance. If the seller decides that they do not wish to comply with these repairs, they may take the house off the market instead.
Expired Real Estate Listings
When taking the time to see the median price of expired homes, you’ll notice that they tend to be inflated. The quoted cost could be quite ludicrous, which is a clear indicator of why the house never sold. However, there are other reasons why a listing could potentially expire. If the house was reasonably priced but poorly marketed, or if it was in need of urgent repair, these could also contribute to the house listing expiring. Some properties will be reactivated on the market under a new real estate agent.
Comparable House Sales
As part of the CMA, you’ll also need to look at houses that are classified in the same relative category as your own home. It doesn’t make sense to compare a two-story bungalow to your single level Victorian house, for example. For a more focused approach, you’ll want to hone in on homes that are similar in terms of size, age, style, and condition. This includes characteristics like the following:
- Size in Square Metres: Appraisers use many different figures to come up with an accurate assessment of your property’s value, but one of these is the square metres of floor space. In general, bigger houses will have a lower value per square metre than smaller sized homes.
- Building Era: The time when your home was built is another characteristic to look at when you are comparing properties. In diverse neighbourhoods, houses may have been built decades apart. You’ll want to find out if older or newer houses are selling for more or less. In some areas, modern homes will be in higher demand. However, in other areas buyers will be on the hunt for classical homes.
- General Condition and Amenities: If similar houses in your area have been recently renovated but yours is still in its original condition, it will be valued at a lower price. Luxury amenities such as spas and swimming pools can also alter the home’s price, as will maintenance issues that still need to be attended to. Houses with extra bathrooms will be worth more than those with a single bathroom as well.
- Location: An appraiser will also see how your home stacks up against the competition in terms of location. If you have ocean views, are conveniently located in a desirable neighbourhood in a major city, or live in a quiet cul-de-sac, your home value will rise accordingly. As part of the CMA, your property will be compared with others in your area. If you are placed in an undesirable location near an industrial factory, busy highway, or airport, you’ll need to compare your house to other homes in similar areas for a true idea of what the value is.
The data assembled in a Comparative Market Analysis can be quite useful when you’re trying to determine what your home is worth. This can help you avoid common pricing mistakes. Working with your local real estate agent to get an appraisal, you can sift through similar properties according to all of these variables to get a clear indication.
Get started with inspecting a personalised CMA by selecting a real estate agent to work with. Compare agents in your local area side-by-side with LocalAgentFinder for free, with no obligations.