Whether you are buying or selling a home, your real estate professional can give you a snapshot of the local market known as the competitive or comparative market analysis or CMA. These are convenient reports that help sellers choose a listing price and buyers to make competitive offers on a given home.
CMAs are generated from multiple listing service software and vary greatly depending on the search fields that are input by the real estate professional. Each quantifier makes the search increasingly specific – type of home (detached vs. attached), zip code, number of bedrooms, baths and living areas, square footage, and numerous other search criteria.
The result is a report that tells you which homes have recently sold, their selling prices, how long they were on the market and other information. The CMA will also tell you about homes in competition with yours that are similar in size, price, amenities, and location.
As many fields of information as there are, some criteria simply isn’t available in a CMA. If the MLS has a field for “water views,” you’ll know. But if not, you’ll have to learn more in the remarks section that is filled in by the listing agent. There you might find “great views” or “lake views.” But who’s to say what makes a great view?
CMA results may vary even between identical homes. One property may simply offer better drive-up appeal or is in better condition than the other. One may be updated or staged more attractively. Those differences can be reflected in the sales price.
When you’re looking at properties that sold, you can also learn how long the home took to sell. This is where a real estate professional who is a neighborhood specialist can be invaluable. He or she may seen these homes while they were being marketed and can tell you if they were in condition similar to yours.
One thing a CMA can’t tell you is why a seller agreed to take less for their home or why a buyer paid over market for another home. Family problems, corporate relocations and other reasons all play a role. If the sale was quick, the seller was likely highly motivated to take the first offer. If it didn’t sell quickly, the seller may have overpriced the home.
For these reasons, CMAs are not home valuations. They are simply tools to use alongside your real estate professional’s knowledge of the market. Your real estate professional will suggest a pricing strategy for you based on the CMA, but the asking price will be up to you.
Last, a CMA is only as good as the most current information. Ask your real estate professional to keep you abreast of the market with new sold and listings information.