Real estate agents complete a comparative market analysis for their clients. This helps real estate buyers and sellers decide a price to offer when buying a house or a price to list when selling a house.
Comparative market analysis (or CMA) in real estate is an analysis of the prices at which similar properties in the same area were recently sold. Real estate agents use CMA to complete a detailed analysis of a home’s worth in today’s market.
Real estate agent has to research information about comparable properties in the area. Real estate professional gets actual information from Multiple Listing Service, which is a real estate industry resource for property records.
The real estate professional looks for recently sold properties that are similar to the subject property and in the same geographical area. Real estate agent compare the properties, adjust for different features and makes estimated value for subject property.
Real estate agent research for different properties in Multiple Listing Service in order to come up with value for the subject property. This includes:
- Properties sold and closed within the last 12 months.
- Active listings – properties currently for sale.
- Pending sales– listings that have sold but not yet closed.
- Expired listings– properties that did not sell during the listing period.
The price from CMA is for the most part subjective. Don’t be surprised if results of a CMA is a price range rather than a set price. It is because in some markets is is very hard to determine the subject property price as a result of differences in comparable property age, size, physical condition and architectural style.
Lets not forget, listing prices is only a price at what seller wants to get for the property. It does not necessarily show the actual value of the property. Active listing property is actual current competition for subject property, so it is good to know what competition of similar homes is priced at.
Lets look at the example: the house has 3 bedrooms, 2 baths and a two-car attached garage. It has 1900 square feet of living area. So when making a CMA real estate agent will try to find three or four comparable properties with those same features. However, that not always possible.
Lets not confuse a CMA with an appraisal. A CMA is not an actual appraisal. A real estate appraisal is a comprehensive evaluation done by an independent professional appraiser.