What Is a Comparative Market Analysis
A comparative market analysis is an examination of the prices at which similar properties in the same area recently sold. Real estate agents perform a comparative market analysis for their clients to help them determine a price to list when selling a home or a price to offer when buying a home. Since no two properties are identical, agents make adjustments for the differences between the sold properties and the one that is about to be purchased or listed to determine a fair offer or sale price. Essentially, a comparative market analysis is a less-sophisticated version of a formal, professional appraisal.
A comparable market analysis can also include currently listed properties, especially if no similar properties were recently sold. However, listing prices only indicate what the seller hopes to get for the property and do not necessarily reflect what it is actually worth.
Typical steps that real estate agent might follow...
Assess Neighborhood Quality
The first step is to assess the quality of the surrounding neighborhood and there are some good online tools these, which make this easier than ever.
Assess the Original Listing if Available
Carefully review the photos and description to evaluate the age and condition of the home, recent upgrades, and potential issues with the previous marketing strategy.
Check Property Value Estimates
A property value estimate can help you evaluate the likely market value of your client’s home and give you a starting point when calculating the cost per square foot of the property. However, these estimates can be inaccurate and do not consider unique aspects of the local market.
Develop a Preliminary CMA
Come up with a rough idea of your home’s value by evaluating sold listings, expired listings, active listings, and pending listings in the area that are comparable in features, size, and amenities to your listing.
Get an Average Price of Comparable Listings
Take the selling prices of the comparable homes you’ve chosen and divide each by their square footage to calculate the price per square foot for each comparable home. Then, find the average price per square foot of the comparable homes and multiply it by the exact square footage of the home you’re trying to sell.
Assess the Home in Person
Based on your research, you should have a ballpark idea of what the home is worth, so you should be able to address any questions about property value the homeowner has for you. When touring a property, consider factors like: condition, additions and upgrades, necessary upgrades, exterior and landscaping, and other amenities. Combine the preliminary data from comparable listings with information gathered during the visit to create a comprehensive CMA.
Find out how much your home is worth...
Schedule some time for an in-home visit to find out the value of your property.