A CMA, comparable market analysis, is a way to determine the current market value of a home. It's how an agent determines the price for which a home will sell. Good listing agents do these before advising a seller to list price. Likewise, good buyers agents do these before advising a buyer what to offer.
Market value is determined by taking the last 60 to 90 days worth of sales that are in the same neighborhood and most like the house in question (subject). Then you adjust for differences between the subject and those that sold. If a home that sold has two more bedrooms and more square footage than the subject, a deduction in price is made to that larger home that sold. If the subject has a finished basement, and a home that sold doesn't, you would add the price of that finished basement to the home that sold. Adjustments like these are how you come to market value.
When making adjustments, you don't take small items into account like ceiling fans. You take large items like number of bedrooms, bathrooms, fireplaces, decks, fences, etc into account. Upgrades like granite and newer appliances should also be taken into account when doing a CMA.
A CMA is more of an art than a science. However, doing a CMA before lisitng your home, or making an offer on one, will tell you the market value of a home. Make sure the agent you hire is doing a CMA before advising you on listing or offer price.
Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com. Or you can visit her website: www.nvarealestate.net.
Header is a combination of photos from the Bristow, Gainesville & Haymarket areas, taken by Chris Ann Cleland.
Chris Ann, very good post and simple enough. Thanks fro sharing . Have a great weekend.
Suma: Thanks. We tend to use words in our business that are common to us, but need explaining to the public. This is one I'll be linking to again and again.
Hi Chris Ann: I see that you use your blogs the same way I use mine. I often refer clients to articles I've written about certain subjects becuase it's easier than reinventing the wheel, LOL.
Elizabeth: I actually took that idea from you. I get a lot of inspiration from your blog.
Chris Ann --- you are so right --- an agent should always do a CMA before advising the seller(s) on a price.
Mama Liz
Liz: I don't know why some of them don't.
Chris Ann... CMA's are VERY important for the prospective sellers to have done. I even go so far as to make adjustments for fireplaces, walk-out basements, etc. The same as an appraiser would do. But at least this way the seller can get a *true* value of what their home/condo is worth.
Valerie: More great examples of making adjustments for bigger things.
Great post! Also, great classes yesterday at the Fall Conference.
Mark: Thanks! It's nice to see you here on AR. I hope you make this a consistent thing.
Chris Ann
A quality CMA is invaluable in providing expert advise to our clients. I place emphasis on the word "quality". And it takes a professional to make the needed adjustments, that software is often times unable to account for.
Trey: Quality advice is right. Working with a buyer or seller without a CMA is like being blindfolded.
Chris Ann,
Good and simple explanation of what happens behind the scenes...and I like how you use these as a reference for your clients...
Lori: Thanks. I learned it from Elizabeth Weintraub.
Chris, a good explanation of a CMA that any client would appreciate. I like that you stated it is an art and not a science.
Teral: I'm scared of the agents that think it is a science. With so many variables in any given house or neighborhood, there is no hard and fast rule of thumb.