What is a CMA?
1. A Comparative Market Analysis
2. A Competitive Market Analysis
Actually, both of these definitions apply.
A CMA is a report prepared by a real estate agent to determine the value of a home.
When you sell your home, a listing broker will do a CMA to establish what the current value is and what the list price should be. This is done by looking at homes that have sold recently and weighing them against your home to arrive at a competitive price.
By the same token, the CMA is extremely valuable to your buyer broker when you are looking at homes to purchase. It is a highly effective tool that can help you decide on the right price to offer on a property.
The way a Comparative Market Analysis works is really quite simple. Your buyer broker takes the subject home, or the home you intend to make an offer on, and pulls up three or more recently sold properties in the same neighborhood with as many of the same characteristics as possible. Through an examination of the home's style, square footage, number of bathrooms, type of setting, i.e., cul de sac vs. a main street, comparisons are made to the subject property.
Adjustments are then made for the differences between the subject property and the comparable sales. If a home that sold has one more bedroom and more square footage than the subject, a deduction in price is made to the larger home. If the subject has a better setting than the sold home, you would add the price difference of that setting to the home that sold. A continuation of this process will arrive at a reasonable value and, eventually, to a suggested offer price.
Depending on the amount of inventory available and the size of the town, the comparable sale should be no more than 90 days to six months old and as close to the subject property as possible. Ideally, the home should be in the same neighborhood; however, that is not always possible.
Upgrades such as new kitchens, granite counters, finished basements, decks, in-ground pools should all be part of the equation.
A Comparative Market Analysis is an important step in the purchase of any home. Be sure the buyer broker you are working with knows how to do one. It can make all the difference in your home purchase.
Related Posts:
Home Warranties, Are They Worthwhile?
Property Disclosure - Who Has the Burden of Proof?
The Importance of Being Pre-approved
What is Included in a Home Purchase?
Do you have questions about buying a home in the Metrowest area? I would love to talk with you. Please feel free to call me at 508-881-6230 - any time or E-mail me.
Copyright 2009 - Claudette Millette, Broker, Owner, TheBuyersCounsel
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Shrewsbury, Sherborn, Southborough, Sudbury, Wayland, Westborough
A CMA is a must for all home buyers considering buying a property.
Hi, Ellen:
Yes, it is an important part of the home buying process.
Good advice Claudette -- I am amazed at how many agents/brokers do not do a CMA before writing an offer for their clients. If you don't do one -- how can you possibly be serving your client well.
Alexsandra:
Absolutely. It is the only way to really have a fair idea of what the buyer client should be offering and, also, I think it helps to give them the peace of mind of actually seeing what has sold in the area so that they can feel that they are making an intelligent purchase.