When analyzing the value of a specific property, the most common way is to create a comparative market analysis or real estate CMA.
There are several reasons why a comparative market analysis is an important tool for real estate agents when evaluating the value of a property.
First and foremost, a CMA allows for an apples-to-apples comparison of properties in the same geographic area. The analysis is essential because it allows for an accurate calculation of prices that should be used to negotiate a sale.
Second, a CMA can help identify any property value trends over time. This information can be useful in formulating pricing strategies and determining when it may be appropriate to sell a property.
Finally, if you are buying or selling a property, having access to data related to similar properties can help you make informed decisions about whether or not to purchase or sell.
Be a local real estate market expert
For a real estate agent, the comparative market analysis allows you to have the expertise to guide sellers on the proper pricing for their property. It also helps determine what segment of the market is the hottest.
The CMA lets you quickly gather vital statistics like the average days on the market for similar homes. You can glean key things like what types of properties are selling the fastest.
Are homes in neighborhoods preferred, or are private settings more desirable? Buyers also rely on an analysis of value before making an offer.
Being accurate with your cma is key
Protective home sellers often will meet with more than one real estate agent. Your comparative market analysis is an excellent way to show potential clients how detailed you are.
Does your CMA clearly explain how you arrived at the suggested list price and probable sale price? Do the comparable sales make sense? Are there nice color pictures that can help the client discern an accurate comparison between properties?
These are all crucial questions to ask yourself before presenting your CMA. Both sellers and buyers care about the accuracy of your report.
The last thing any consumer wants to discover is that your pricing was wrong. Being inaccurate costs your client money.
One of the most vital functions of any real estate is clearly and accurately defining fair market value.
A CMA helps with learning local market trends
1. To ensure that you provide the most accurate information to your clients, a comparative market analysis will help you learn about what is selling and what areas of the market. For example, are there a few neighborhoods crushing it due to their popularity?
2. By understanding what is selling, you can price your home realistically and avoid overpricing.
3. By knowing what market areas are hot, you can target your advertising based on potential buyers’ needs and interests.
4. Using a CMA also allows you to make informed decisions when negotiating with buyers or sellers. Knowing the current trends in your area will give you an advantage when bargaining for property values or negotiating contract terms.
5. A CMA gives consumers peace of mind by helping them to understand the market conditions surrounding their specific area.
6. A comparative market analysis also helps real estate agents market to a specific generation of people, such as millennials.
An accurate CMA means a quicker home sale
The goal of most home sellers is to sell their homes for the most amount of money in the quickest amount of time.
The longer a home stays on the market, the likelihood of decreasing the list-to-sale price ratio. Days on the market are your enemy in real estate sales.
When a CMA has appropriate information, sound decisions will be made. Pricing is a science and art. Without the help of a market analysis, pricing a property will be very challenging. Home prices accurately go contingent quickly.
Zillow estimates can’t replace a comparative market value
Unfortunately, some people believe going to a website like Zillow will be an accurate way of determining property value. Too bad that’s not even remotely true. You have a better chance of seeing Bigfoot than an accurate Zillow value.
To get proper pricing, you need someone like a real estate agent or appraiser to visit your property to access its amenities, condition, and other factors.
A comparative market analysis can be beneficial for your business in many ways. It can help you identify opportunities and risks, create a strategy, and motivate clients to make the best decisions.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 35 years. Bill is the owner and founder of Maximum Real Estate Exposure. For the past decade, he has been one of the top RE/MAX REALTORS® in New England.