A Comparative Market Analysis (or CMA for short) is an incredibly important tool utilized by real estate professionals to come to an informed decision about the value of a piece of property. In a nutshell a CMA is an evaluation of similar, recently sold homes that are near a home intended to be bought or sold. That is a very simple way to describe a CMA report, but it should give you an idea of what I’m talking about.
Comparative market analyses are an excellent and very detailed tool to help determine the current market value of any given plot of real estate. A professional and well executed CMA will be be anywhere from thirty to even eighty pages long and will have supporting evidence as to why and how conclusions where made about a home’s value. So in other words, if you are thinking about selling your home but you have no idea what it is worth, then getting a comparative market analysis done on your property will give you a great baseline to help you make an informed decision.
I’ll give you an example. Have you ever noticed when browsing for property on Zillow there is always a prominent section that Zillow labels a “Zestimate” with a rough value of the property? That is basically Zillow running a whole lot of behind the scenes data to come up with a quick CMA. However, because the conclusions that Zillow comes up with are being done by an automatic piece of coding and don’t take into account the condition of the home, recent upgrades, features, or amenities, they are often highly inaccurate and in my humble opinion, do more harm to buyers and sellers than they do good.
NOTE: A comparative market analysis is not the same as an appraisal, which is performed by a licensed appraiser.
Are CMA’s Only Useful for Sellers?
While the CMA is a great tool for a seller when deciding on a price to sell their property, a CMA is equally as useful for a buyer when deciding what sort of offer they should make on a home they may be interested in. Without a CMA how will you ever know if your offer is too high or too low? When you make an offer on a home are you getting a good value? A CMA is a good place to start when making these determinations.
How Do I Get A Comparative Market Analysis?
The best way to get a CMA done on any given home is to contact a licensed real estate agent. Real estate agents are really good at putting together CMA reports. Heck, on the weekends I do them sometimes purely for fun! Yes yes, I’m a nerd, but what can I say? I love my job.
Fortunately, most real estate agents (myself included) will do them absolutely free of charge. In fact, whenever I begin a transaction, either for a buyer or a seller I insist on a CMA being performed. Not only are they incredibly informative for you the client, but they also help real estate agents do their job more effectively. A CMA is a wonderful snapshot of the value of a home along with the immediate neighborhood and they help begin a transaction from a position of knowledge as opposed to negotiating blindly.