Comparative Market Analysis (CMA) establishes a property’s market worth by contrasting it with comparable properties that have recently been sold and those that are currently on the market. For listing agents to choose the appropriate sale price for a property, a CMA is an essential tool. Additionally, buyer’s agents might use it to encourage their clients to submit competitive offers.
It’s difficult to conduct accurate, reliable CMAs, and the majority of agents aren’t taught this ability in pre-licensed real estate courses. We’ll go over how to foolproof CMAs in detail in this article and provide you with a free CMA presentation template to use when presenting your findings to clients.
Let’s get started by going through everything you need to include in a comparative market analysis that will wow any homeowner.
1. Assemble all the information you can about the property in question.
The property for which you are estimating the market value is referred to as the “subject property” in a CMA. Since comparison is a key component of a CMA, we must first learn everything there is to know about the subject property in order to identify other comparable properties with which to compare it.
Data from the Subject Property Will Be Used in a CMA
We will contrast the “subject property” (whose value we are attempting to estimate) with other, comparable homes that have either just sold or are still on the market using subject property data.
2. Get previous sales or listing information for your subject property.
The market itself is the best predictor of what the market will bear for a specific property. The prior sale and listing history of the subject property sheds light on what the market has historically supported (or not) for the property. Additionally, it aids in our initial estimation of the home’s value in relation to the overall market trend.
3. Assemble Recent Comparable Sales
The second most crucial stage, after understanding your subject property, is to have pertinent comparable sales, or “comps.” Properties with comparable properties (comps) are those that share many of the same basic attributes as our subject property.
An excellent comparable is a home that has:
- Sold within the last 12 months (or six months in markets with high turnover)
- On the map, close to your subject property
- Closed in a suitable amount of time within the rules of the market and the sale
4. Collect Active Listing Comps
The active listing comp is similar to a recently sold comp, with the exception that, as you might have guessed, it is still up for sale. Active listing comps are crucial to the CMA process because they shed light on the kind of activity our subject property would probably experience in the present market.
How Active Listing Comps Will Be Used in a CMA?”
The third and final aspect of our property’s value, depending on how the market has responded to listings comparable to ours, is provided by active listing companies. Additionally, we’ll evaluate the level of competition we’ll have if we enter the market at different pricing points.
Conclusion
You’ll have to provide evidence of your work, just like your eighth-grade math teacher required. Because of this, The Close created a practical CMA presentation template that will give your clients or prospects all the details they ought to comprehend about how you arrived at your CMA outcomes and establish a price range in just a few pages.
Although it is difficult to learn how to conduct a comparative market analysis, you now have a complete understanding of how to determine a property’s value in your market. Use this information to improve the accuracy of your sellers’ list pricing and the competitiveness of your buyers’ offers. Do you have any advice or special queries? Post them in the section below!
