What Is a Comparative Market Analysis?
A comparative market analysis is a detailed analysis of the real estate market in an area, and its significance can be a key factor in your decision of whether or not to purchase a particular property.
Conducting a CMA involves three main components:
Identifying Comparable Properties: This is the initial process that you’ll need to go through. First, you’ll need to find comparable properties for your area. In order to do this, you’ll need to have access to similar properties as those of the property you’re attempting to analyze. The availability of similar properties could be made easily with websites like the MLS, Zillow, Trulia… or even asking your realtor.
Actual Data Gathering: This involves actually gathering data on each comparable property in order to get a more accurate analysis. For example, say that you found 10 similar properties to the property you’re trying to analyze.
When Is a CMA Necessary?
Every real estate transaction involves an offer and an acceptance of an offer. Where the real estate transaction involves a multiple offer situation, a comparative market analysis is designed to help buyers, sellers, lenders, and home buyers understand the market value and how it compares to the asking price.
A real estate buyer has the ability to obtain a comparative market analysis when using a broker. A real estate broker can perform a comparative market analysis for the buyer at no charge to the buyer.
A real estate seller can request a comparative market analysis when selling a home, thereby allowing more knowledge on the seller’s part to future buyers’ offers, and making the eventual sales price more competitive.
A lender who requests a comparative market analysis will have a more accurate representation of the home’s real value as compared to the sale price. A CM analysis also allows a lender to compare the sale price to other similar properties in the surrounding area, as well as identify the home’s current market place value.
One of the most popular uses of a comparative market analysis is in rental real estate. It provides a complete analysis of the rental market as well as a breakdown of the comps for tenants. The CM analysis also allows real estate managers to determine how the apartment’s current rents compare to similar apartments, market price, and number of apartments available.
For a Seller Listing Appointment
How Long Does the Process Generally Take?
The alternative to the buyer’s agent is the listing agent. The listing agent is the real estate professional who takes the listing information and implements the marketing strategy for the real estate agent.
The listing agent is the one who puts the property in contact with the buyers. The list agent is the one who negotiates the ultimate price of the property and creates the final sales contract with the buyer. The real estate listing agent represents the buyer or seller in all real estate transactions and ensures the parties comply with all the terms of the contract including information exchange and setting the closing, settlement, and closing date. They can remedy all ethical violations and help you resolve differences in the contract.
The listing agent might bring the buyer to the table or contact the buyer through lead generation. It is the listing agent’s responsibility to do the research so that the buyer is interested in looking at the property and getting the property ready to accept offers. The listing agent handles the appointment and handles the negotiation of the price. This is also the agent who decides how soon the property will be on the market for a list.
When Finding a Good Deal for a Buyer
Comparative market analysis (CMA) is one of the most important tools in a Realtor’s arsenal. The Comparative Market Analysis (CMA) is the comparison of the current and future market trends as it relates to a home by using consistent and reliable market data. A CMA should not analyze only the past six months, but it should be a look back at the housing market which is a few years ago at this point. The market is a reflection of the era and the time that it happened. Using a CMA will help eliminate any sporadic or partial points of view. It will be clear, unbiased and provide the buyer with a complete market analysis.
To create a Standalone CMA, we use a type of Report Card Quality (RCQ) in each area of the residential market. We believe that the RCQ is the only unbiased way to review the overall health and quality of the residential market. A CMA buyer is able to compare individual assessment results to assess and determine if the market is strong, weak, up or down.
How to Create a Comparative Market Analysis
(CMA)
A Comparative Market Analysis (CMA) is essentially a snapshot analysis of the current market conditions and the market trends that may impact the value of your home, including the market analysis of surrounding comparable properties.
Buying and selling a home is a huge investment that is not one to be made in haste. CMA’s are completed by trained professionals with an in-depth understanding of the local market and real estate trends.
A CMA is one of the most important tools used in the home-selling and home-buying process and plays a vital role in the final sale and purchase price of your home.
A CMA can be used by the local assessor to value your home as well. This is a very important consideration. When you price your home, your valuation may not be based on the true value of the home unless there is an elaborate analysis of the home’s current market conditions.
A CMA proves to be essential in a situation in which the current market value of your home does not reflect your true investment. In such a case, it is important to analyze the market trends of an individual area, which is in turn beneficial to the buyer.
A CMA also proves mid-term investment and future value of your home.
Assess the Quality of the Neighborhood
One of the most essential parts of conducting a comparative market analysis is to make sure you have a good idea of the quality of the nearby neighborhoods. For starters, you’ll want to determine the walkability score of the neighborhood to ensure you don’t choose one that’ll be too far away. There are numerous websites that will give you this kind of information, but it can be difficult to gauge the accuracy of their score. For this, you may want to consider going to a few open houses or driving around the neighborhood to get a feel for how walkable it is.
You should also look at your home’s location relative to the schools in the area. Although this doesn’t entirely determine the quality of the neighborhood, it’s a factor that may influence whether or not you want to relocate there. You may want to consider a home that’s located in a neighborhood with good neighborhood amenities, such as a community pool, a rec center, or a local church that hosts weekly activities.
Assess the Original Listing (if Available)
If the property you’re about to buy has an agent list it as a comparative market analysis (CMA). This will be a list of similar properties that have recently sold in the same neighborhood or area. This is also useful information before you ever list the property with an agent.
The agent will provide such CMA information from the Listing Summary Report. The agent can also tell you if the listing is an Open House or an already sold property.
Once you acquire the Listing Summary Report, the next step is to compare the CMA with the property you are interested in buying. The CMA will tell you how much and what percentage the property’s value has changed since it’s been listed. Be advised, however, that in some areas, the property’s value may not have increased or decreased at all. That’s why you should not rely solely on a CMA in providing to support your acquisition price. It’s also important to compare the property’s size and the neighborhood’s market comparisons.
Check Property Value Estimates on Zillow & HouseCanary
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To estimate the sale price of a property, it’s important to use more than one source – because the value they come up with will likely differ.
Zillow, the largest real estate database on the Internet, is one of the most popular sources for property value estimations. The site also has its own type of home value estimate – more like a snapshot of what’s currently selling for in the neighborhood.
One general rule of thumb Zillow users like to follow is to take the median sale price of the neighborhood, plus 10%, or the median sale price minus 10%, whichever is lower.
However, Zillow has its drawbacks. First off, it’s calculated in some weird way that doesn’t seem to consider any type of market saturation. This means that if a home is the only one available for sale in a neighborhood, a buyer would want to pay more for the home since they know that no one wants to buy the other one. This is an issue since Zillow doesn’t take such a huge factor into consideration when it comes to estimating or calculating the value of a property in a given neighborhood.
Start Creating Your Preliminary CMA
United Real Estate is a top-rated full-service real estate brokerage located in San Diego, California.
United Real Estate's President Chris Wagner gave business owners and sellers a market analysis session to show how he turns competitor's web sites, Google searches and competitor ads into a preliminary market analysis report, and how he uses this information to set the right price for the seller and to set realistic sales expectations for his buyers.
The technology that Chris uses was developed by a company called RealTrends, which has been around in the real estate industry for about a decade.
The report Chris gives his clients is based on an extensive database of national statistics, and provides comparable sales data as well.
This information was obtained from all over the country. This report can help your business grow both in sales and profits.
This report generates a monthly or bi-monthly profit report for the seller.
So, how did the presentation go? All told, some 100 businesses attended this event, and based on the feedback received there are many other business owners that would like to learn more about what United Real Estate can do for them.
Hopefully, Chris’s presentation has piqued your interest in what is known as a comparative market analysis. A CMA is an economic analysis of the demographics, income levels and financial health of a specific area.
Get an Average Price from Comparable Listings
A Comparative Market Analysis (CMA) is a one of the most efficient and effective tools available to the