What is a Comparative market Analysis (CMA)? Essentially, a CMA compares your home to other homes. Why do you want to compare your home to other homes? You could use the CMA to determine a listing price range, or to determine how your home compares to others in terms of updates or maintenance. A buyer’s agent may create a CMA to determine a buyer’s offer price. There are any number of reasons why you’d have a CMA done.
Be very clear, a CMA is not an appraisal. An appraisal considers a number of things related to the specific property and develops an impartial value of the property. A CMA is typically performed by a real estate agent based solely on recent sales and current listings and it may or may not be impartial depending on the purpose of the CMA.
A CMA can be very useful to determine how your home compares to others. For example, you may want to list your home for $100,000 because the house down the street sold for $100,000. And maybe, that would be a good price point. However, if the house down the street had a new roof, a new water heater, a new HVAC system, and new appliances and your home has a 20-year roof, a 12-year old water heater, a 15-year HVAC system and appliances from 1985, then your home is not as valuable as the house down the street. A buyer will start adding up these things ($8,000 for a roof, $2500 for a water heater, $6,000 for HVAC, $5,000 for appliances) and will offer $70,000. Deferred maintenance can be caught early with a CMA and give you an idea of what will cost you in terms of a sale price.
A CMA can be used to compare your home to others in terms of upgrades. For example, you may want to list your home for $100,000 because the house down the street sold for $100,000. Your agent investigates and discovers that both your home and the house down the street were both well maintained and all the mechanicals (roof, water heater, HVAC, appliances, foundation) are so similar in age and condition that there is no discrepancy. However, your agent also discovers that the house down the street has updated fixtures, new cabinets, granite counters, hardwood flooring through out the home, modernized bathrooms, and an upgraded electrical panel to accommodate modern electrical homes. Your home is still sporting the carpet, fixtures and Formica from 1985. A buyer will start adding up these things ($10,000 kitchen updating, $8,000 each bathroom updating, $10,000 flooring updating) and will offer $70,000.
In both cases, the CMA can show you what your home could sell for in comparison to the other homes that have recently sold and with those currently on the market. It can help you decide if you want to list your home, what maintenance you may want to do to improve your pricing, or what upgrades you may want to do.
I provide a complimentary Comparative Market Analysis in my area and I’d appreciate the opportunity to meet with you and set you through the process and discuss your plans and needs. Contact me to schedule your CMA.