A Comparative Market Analysis is a vital process to keep up with the evolving real estate industry. When dynamics change so quickly, how can you make a CMA useful and accurate? There is a constant tug-of-war between buyers, sellers, and investors seeking market advantage. To determine the correct home worth for your clients, you’ll need to conduct your homework.
1- What Is Comparative Market Analysis?
A comparative market analysis (CMA) calculates home values depending on recently sold and comparable properties in the region. Real estate agents and brokers create CMA reports to assist sellers in determining listing prices. People can conduct their analysis by looking at comparable properties on real estate listings.
A CMA in Real Estate
A CMA is an important technique for determining real estate value. The CMA assists in determining an acceptable asking price. It depends on what similar properties in your region have sold for on the market.
2- Outline the advantages and disadvantages of your listings
Walk the property inside and out when visiting the potential seller’s home. Take notes, and photos, and make a list of the home’s advantages and disadvantages. A property with original features may have a lesser value. Whereas, one with new windows and a new roof may have a higher value. Buyers are more likely to show interest in move-in-ready residences.
3- Process Of Conducting a Comparative Market Analysis
A CMA is a more detailed process of calculating home values in a region. The process involves more than just comparing the prices of recently sold homes in the area. Here’s a rundown of the basic steps for creating an accurate CMA.
i- Assessing The Neighborhood
The CMA should consider the overall quality of the neighborhood when determining the correct listing price. It should ensure that the homes available offer fair value. Consider the number of appealing blocks to be found. Think about the amenities available in the neighborhood. Consider other factors, such as the neighborhood, the state of the schools, and the home’s curb appeal.
ii- Gather Details
A real estate agent or broker will evaluate the existing listing. He will conduct an in-person visit to obtain information on the subject property. They’ll look at the house’s size, living area, age, style, construction, condition, layout, finishes, landscape, upgrades, and updates.
iii- Select Comparable Properties aka “Comps”
Find three to five previously sold comparable properties in the region that are similar to the subject home. The comparison should be within one mile of the subject property and the school district as the subject property. Focus on similar properties regarding square footage, lot size, bedrooms, baths, and construction type to the subject home. Keep track of when the comparable property was last sold. Real estate prices fluctuate frequently. The more recent the data, the better. Comparisons should be done in the same spot. If the house is in a unique position, such as on a golf course or on the water, compare it likewise.
iv- Adjust Differences
Adjusting for discrepancies between the subject home and each similar property is the next stage. Each of the differences is assigned a dollar value by an expert real estate agent or broker. The value of each comp is accordingly. If the comp includes a feature that is inferior to the subject home, the value of the comp increases. If a comparable property includes an extra bedroom, it is logical that the buyer paid more for it. In this situation, you’d subtract a number from the comp to account for the extra bedroom.
v- Determine The Per Square Foot Sale Price
Divide the adjusted price of each comp by its square footage to get the sold price per square foot. To get the average, add all the sold prices per square foot from all the comps. Divide by the number of comps. Multiply this average by the subject property’s square feet to determine its current market worth.
4- The Bottom Line of Comparative Market Analysis
The best comps are those that are most similar to the subject at home. They should require the least number of adjustments. Depending on the market, the final price may need adjustments. The price fluctuates based on whether the market is hot or the inventory is low. In contrast, the price will need a reduction if there are several similar properties on the market. Also, read our blog on fair market value.
Regentology Can Do All This Legwork For You
Regentology has a team of knowledgeable agents who have already done their homework on the market. They will connect you with professional realtors who have information about home values depending on recently sold and comparable properties in your region. These real estate agents and brokers create CMA reports to assist sellers in determining prices. Simply fill out the form to know more!