When helping clients set a price for selling their property, it may seem subjective as many factors add to or take away from a property’s worth.
To remain objective, real estate agents should use a comparative market analysis, or CMA, which uses pricing based on comparable local sales.
A CMA in real estate helps set realistic expectations for selling a property, preventing any miscommunication between you and your clients. Additionally, CMAs can help you become an expert in your market. Keep reading to learn more about CMAs and why they matter in real estate.
What is a CMA in real estate?
A CMA is a tool used to estimate a property’s value based on recent sales of similar properties in the area.
While it’s common to take square footage and location into consideration when pricing a home, other factors, such as the age and condition of the home and unique features, such as a pool, can affect the home’s value.
Why do you need a CMA in real estate?
CMAs are essential in real estate because a property’s price can’t be too low that clients will lose money or too high that they won’t receive any offers.
A CMA leads to a reasonable range for the area, making the property more likely to sell. From there, the client can make the property more desirable by making it the best home in that price range.
From a buyer’s perspective, a CMA also shows whether the seller is looking for a fair price.
What’s in a CMA Report?
Agents carefully pull data from the multiple listing service (MLS) to create a real estate CMA report. When creating a CMA, include three or more recent similar sales and information about the property’s size and features.
Similar sales
The report should include information about the sale prices of recently-sold comparable homes in the area.
If there aren’t enough comparable homes sold in the area recently, the agent can use a relatively similar area based on factors such as schools, crime rate, etc.
Listing length
It’s helpful to add the time each property took to sell after it was listed.
Price changes
List the starting prices of the properties and the final selling prices.
The low, average, median, and high selling prices can give context to a property’s value.
Size of home
The square footage for living space and the lot size can add to the home’s value.
Age, condition, and special features
Newer homes and recently renovated homes often sell at a higher price.
When homes have additions such as pools and fireplaces, they increase the home’s value.
Showcasing value with Virtuance
Hiring a real estate photographer can increase your chances of getting a higher selling price and selling your listing faster.
Virtuance offers professional real estate photography services such as 3D tours and aerial drone imagery that will make your property stand out to buyers and sellers.
FAQ
CMAs are essential for real estate agents because they are the most accurate way to price a property. By comparing it to similar properties that recently sold in the area, sellers can ensure they’re pricing their properties competitively.
No. Although both use relevant data to estimate the fair market value of a property, an appraisal is conducted by an appraiser. Licensed real estate agents complete CMAs for their clients.
