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| Research & complete CMA before Selling |
"What is Comparative Market Analysis (CMA)" is a common question in the real estate sector. Comparable Market Analysis, also known as “CMA,” is an analysis of recently sold homes (“comparables”), preferably sold within the past 6-12 months, that helps establish a price range for a home which is usually carried out by a real estate professional.
The purpose of a CMA is to help determine the probable price of a home and can help eliminate bank appraisal problems once a buyer and seller agree to a price as the appraised value should be equal to or more than a real estate professionals suggested listing price. However, no methods really exist that can predict for how much a home will sell for with 100% accuracy.
Although, an accurate CMA should be very close to a homes final sale price. There are many “pieces to the puzzle” that a real estate agent takes into consideration when completing a CMA to help determine a list price for a home and help predict a probable sale price.
The interior features of a home form an integral part when performing a CMA. Every home has different important features. When performing a CMA a real estate professional will take into consideration many interior features.
• Area Dimention: The total square footage of a home plays a large role in a CMA. A real estate agent should compare homes that are very similar in square footage (within 200-300 square feet is best). The square footage of a home that is much smaller or larger, should be adjusted in a CMA. Typically only heated areas can be counted in the square footage of a home.
• Bedrooms: The total number of bedrooms is an important consideration in determining the value of a home. If a home has 3 bedrooms and all of the recently sold comparable homes have 4 or more bedrooms, a real estate agent should make an adjustment on the subject properties value.
• Bathrooms: The total number of bathrooms is an important interior feature of a home. An adjustment should be made within the CMA if a home has 1 less full bath then all of the comparable properties. Additionally, the condition of a bathroom is also an important part of a CMA. A home with bathrooms renovated in the past few years should have a higher value than a home that has bathrooms with backdated decor.
• Kitchen: A home's kitchen will often sell a home. There are many features within a kitchen that impact a CMA. The type of cabinets (Cherry, Oak, Maple, Etc), type of counter tops (Granite, Quartz, Corian, Etc), type of back splash, and type of appliances are just a few to mention. In completing a CMA the condition of the kitchen needs to be weighed when comparing the subject property to recent comparable sales.
• Basement: In areas where homes do have basements, this is an important feature when determining value. There are many different types of basements, full basements, partial basements, crawl space basements, full finished basements, partially finished basements, and walkout basements. A home that has a fully finished basement should have a higher value than a home that is built on a slab or an unfinished basement. In some cases, walkout basements and homes with means of egress from the basement, can be counted in the square footage of a home.
• Flooring: In most cases, the type of flooring will impact the value. There are many different types of flooring. Linoleum, hardwood, ceramic tile, and laminate are just a few that are noteworthy. A home with a high-end ceramic tiled kitchen floor should have a higher value than a comparable home that has linoleum flooring in a kitchen.
Alongside interior features, exterior features of a home also counts essentially. These exterior features should have an impact on the value within a CMA.
• Siding: The type of siding from one home to another can make a difference in determining value. A home with low maintenance vinyl siding will typically carry more value than a home with cedar or wood siding, due to the maintenance involved.
• Windows: Windows are important to a home’s energy efficiency as well as it’s safety and often important to a prospective buyer. When completing a CMA, a real estate professional should consider a home that has newer vinyl thermopane windows to have more value than a home with original wood storm windows.
• Roof: The roof of a home has one of the highest replacement costs. When was a roof last replaced and whether it was a complete tear-off or not, should be important to a real estate agent completing a CMA. A home with a brand new tear-off roof is going to have a higher value than a home that has a 20-year-old roof that will need a total tear-off. If a seller is unsure of a roof age, an experienced real estate agent should be able to get a good “ballpark” on the roofs age.
• Fencing: Whether a home has chain link fence, stockade fence, invisible fence, or is partially fenced, or no fencing, should be taken into consideration when completing a CMA.
• Parking/Garage: The presence of a garage and/or driveway is a very important exterior feature to many potential buyers. Many buyers won’t consider looking at a home with no garage and/or driveway. Within a CMA, there should be an adjustment made for the number of garage spaces and also whether a home has a driveway or not. For example, a home with a 2 car garage has more value than a recent comparable sale that has a 1 car garage.
• Patio’s/Deck’s: Outdoor space is important to many buyers. The presence of a deck or patio should be adjusted for within a CMA.
Acreage normally will have the largest impact on a homes value. A home with a 4 acre lot will have higher value than a home with a 2 acre lot. Additionally, a homes lot location will impact the value of a home. A home that is located on a “corner lot” will traditionally have less value than a home that is not located on a corner.
The mechanics of a home should also be taken into consideration when performing a CMA. The mechanics of a home are items of a home that a buyer should be looking at when viewing a home. The age, model, homes heating system, cooling system (if applicable), hot water heater, and electrical service all play a part in determining the value of a home within a CMA. A home with a 20 year old 80% efficient furnace and a 15 year old 30-gallon hot water heater is going to have less value than a comparable home that has a 2 year old 95% efficient furnace and a tank-less water heater.
In CMA only the same types of home with similar features should be compared. If performing a CMA on a ranch style home, they must use comparable sales within the last 12 months that are also ranch style homes. Comparing a ranch style home to a 2-story colonial style home is not acceptable.
Moreover, Location should be extremely important to a real estate professional while performing a CMA. There are many location based factors that should be taken into consideration.
• City or Town: In most cases, when a real estate professional is performing a CMA, they need to find the recent comparable sales within the same city, town, or village. In some rare cases this may not be possible, but if there are comparable sales in the same area, those must be used first.
• Proximity to the Subject Property: The distance from the subject property needs to be considered. A home that is 10 miles from the subject is likely to be used before a home that is 75 miles from the subject.
• School District: Many communities have several school districts within the same city, town, or village. The subject property and recent comparable sales should in most cases have the same school district.
Truly, pricing a home accurately is a science and takes lots of practice. A real estate expert with local market knowledge should be able to closely predict what a house will sell for by completing a detailed comparative market analysis (CMA). CMA is crutial and extremely essential in determining the right price of a home to sell it off faster. Right after you make the decision to sell your home, hire an expert to carry out a CMA for you otherwise it can be a troublesome business.
