A home’s price is a moving target that is based on where it is when it’s listed for sale, whether it has that trend open kitchen, all of it. So if you’re tasked with pricing your own home before putting it on the market, how do you figure out how much your place is worth?
Home sellers pondering this question will no doubt hear they should figure this out by asking a Real Estate Agner for comparative market analysis, or CMA. But what is it? A comparative market analysis estimates a home’s value based on the recent sales of similar real estate in the area.
Whether you’re hoping to buy a house or sell one, understanding the CMA is essential. Here’s everything home buyers and sellers need to know.
Real Estate Agents create CMAs by looking at comparables, or comps. These are recently sold properties that are similar to your home. Similarity is key since it gets you closest to an apples-to-apples comparison.
Let’s say your home has three bedrooms, two baths and is around 2,000 square feet. Your neighbor’s down the block is also a three-bedroom, two-bath house with 1,950 square feet and it sold for $300,000 last week. Odds are, your place is worth about the same.
Comparable homes should be in the same or similar neighborhood, have the similar square footage, number of bedrooms, bathrooms, features, and upgrades.
Since most houses are at least a little bit unique, hoe identical do they need to be?
Our experts say comps should ideally have the same number of bedrooms and bathrooms, be located within a quarter-mile of your home, and within 200 square feet of your home’s size. Whenever possible, they should be in your ZIP code and school district too.
It’s also important to make sure your CMA analyzes recent sales. Markets can change quickly so they should not go back more than 6 months.
The more comps you use, the better you triangulate a home’s price, but if you have at least three comparable, recently sold properties, you should be able to average out their process and get a good sense of what a home is worth.
Why ask a Realtor for a CMA?
S&D Real Estate Agents provide free CMAs. In fact, comparing CMAs is a great way to find the agent you want to work with. We encourage potential clients to get a market analysis and conduct interviews with at least three different agents before signing with one. This will help you really spot the agents who know the area well.