What is a CMA?
When you get into the process selling your home, an entire new world of terminology and acronyms is opened to you. Some may seem familiar while others might as well be ancient Greek.
A CMA request is a request for a ‘Comparative Market Analysis’. A CMA shows a seller the properties that have sold in the ‘subject property location’ in the last 6 months. These are what you hear referred to as “Comps”. This will give the seller a very good idea of how much they can expect to sell their house for.
A CMA will consist of a number of components, including what similar properties are currently for sale, and at what price. In addition, the report will indicate what has been sold in your area and the price the seller obtained. The CMA should also contain the details of the home as well its transfer history.
By going to sold property records, a Realtor selects recently sold properties that are similar to the subject property and in the same geographical area. By comparing these properties, and adjusting for feature differences, an estimate of value is made for the subject property.
There are several things to consider when choosing comps:
- When the property sold: Sales more than six months in the past are not good comps, especially in fast-moving markets like Saline County. The more recent the sales the less likely that the market has moved enough to make the properties’ sold prices irrelevant at the time of the CMA.
- Where the property is located: The very best situation is that the home is in the same subdivision. That’s not possible in a lot of cases, so the next consideration is locating comps in the same neighborhood or general area. When you can’t get suitable comps that way, very similar homes in similar subdivisions in other parts of town may be the only resource available.
- Characteristics of the home: When it comes to the number of bedrooms, baths, the square footage of the home, the size of the lot, and other features of the home, the comparable homes should be as similar as possible. It’s rare, except in large cookie-cutter subdivisions that you’ll get all of these things to compare exactly.
That last item above brings us to a discussion of how we compensate our calculation for differences in the structures. We make adjustments, much like those of appraisers, to adjust the sold prices of the comparable homes to better match our subject property.
In other words, if we have a 3 bedroom, 2 bath home with a two-car attached garage, and 2100 square feet of living area, we’ll try to find three or four comps with all of those features the same. However, we rarely will, so we’ll need to make adjustments to their sold prices.
Crucial to a CMA’s accuracy in determining market value is the selection of the best comparable properties. Three agents choosing even one different comparable out of three or four used can come up with some very different valuations. This happens a lot when a seller is shopping for a listing agent. They get a value estimate from several agents and they’re surprised at the differences. Unfortunately, often the one who gives them the highest number is the one who gets the listing, and usually, it’s not a good number.
It is crucial to use an experienced agent in the area that you are listing your home. A local agent has the knowledge of past sales personally. There are areas in Central Arkansas that are vastly different and an agent that works primarily in Sherwood for instance, may not be knowledgeable in Benton or Bryant.
I am always available for a Complimentary CMA for sellers in our area. My team and I bring knowledge of our area that is unparalleled. Reach out to me and I would be happy to prepare a Market Analysis for us to sit down and go over together.
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