What is a Real Estate CMA?

In real estate, a comparative market analysis (CMA) is a tool that real estate agents use in order to help sellers set the list price for their homes and to help buyers make competitive offers.

WHAT A CMA IS NOT:

• An appraisal
• The homeowner's opinion of value
• Assessed value for taxes Based on current listings.
• What your neighbor Mary is asking for her home doesn't determine your home's market value.

WHAT A CMA IS:

A tool used by real estate agents to estimate a home's current market value based on the recent sales of similar homes in the area.

Why sales and not current listings? Because current market value is based on what a willing buyer will pay for a home. The only way to know that is by looking at similar homes and what buyers were willing to pay for them. The real estate agent uses the MLS to gather comparable home sales, typically going back in time no longer than six months.

No two homes are identical in every aspect, so adjustments in value are made to compensate the subject's property (the home in which the value is being determined):

• Number of bedrooms and bathrooms
• Square footage
• Lot size
• Age
• Condition
• Upgrades

While a CMA is typically part of every listing agent's listing presentation, buyers' agents often compile them as well. Generally, they do this for their buyers to ensure that the home they hope to make an offer on is not overpriced for the market.

Will every agent's CMA come up with the same market value estimate? Not necessarily. However, they should all be close. If one agent's CMA stands out because he or she came up with a much higher evaluation than the others, be suspicious. They may be trying to "buy the listing," as it's known within the industry. These agents enter into the contract with sellers thinking they will request price reductions until the home is finally at the right price. Sadly, by then, the home has been on the market so long it may be stigmatized, with buyers and agents wondering why nobody wanted to buy it.

Remember, a home is worth only what a willing buyer will pay. Without a comparative market analysis, a home for sale may be priced too high and spend longer than necessary on the market