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A comparative market analysis, or CMA, is a real estate agent's evaluation based
on local listing and sales data used to determine the probable sale price of a property
in the current market. For a seller, a CMA can help you determine a listing price.
If you are a buyer, the CMA will help you decide on what to offer for a listing.
Although reports can vary from a two-page list of comparable home sales to a 50-page
comprehensive guide, the length and complexity of the CMA depends on the real estate
agent's business practice. However, standard comparative market analysis reports
contain the following data:
1. Active Listings
Active listings are homes currently for sale. Such listings are not completely indicative
of market value because sellers can ask whatever they want for their home, but they
will give you an idea of averages.
2. Pending Listings
Pending listings are formerly active listings that were under contract. These homes
have not yet closed, so they are not yet a comparable sale. Unless the listing agent
is willing to share information about the pending sale -- and many are not -- you
will not know the actual sold price until the transaction closes. However, pending
sales do indicate the direction the market is moving.
3. Sold Listings
Homes that have closed within the past six months are your comparable sales. These
are the sales an appraiser will use when appraising your home for the buyer, along
with the pending sales (which will likely have closed by the time your home is sold).
Look long and hard at the comparable sales because those are your market value.
When examining comparable sales remember to choose homes that most closely resemble
your home. It is difficult to compare a tri-level home to a single-story home. Select
the homes from this list that are mostly identical to your home in size, shape and
condition, such as: similar square footage, similar age of construction, similar
amenities, upgrades and condition and similar location.
4. Off-Market / Withdrawn / Canceled
These are properties that were taken off the market for a variety of reasons. This
number can be used as a high water mark. The reason these homes are removed from
the market may be due to prices being too high. The median prices of this group
will almost always be higher than the median prices of comparable sales. However,
listings cancel for other reasons such seller's remorse, the DOM was too long, repair
requests, or the seller fired the agent.
5. Expired Listing
This group will reflect the highest median sales price because they did not sell
and were probably unreasonably priced. Some of the expired listings could also show
up as an active listing, listed by a new agent at a new price. Listings also expire
because they were not aggressively marketed or because the home was in need of repairs.
A real estate agent's knowledge of the local market can affect the accuracy of a
CMA, particularly in a neighborhood with a lot of variability in the housing stock.
Unless the agent has actually seen the comparable listings, he or she may not draw
the correct conclusions. So pick your agent carefully and you too can benefit from
the value of a CMA.
Greg Sullivan is the President of www.electronicappraiser.com,
a leading provider of home appraisals offering a nationwide personalized instant
home appraisal service.
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