How to Interpret a “Comparative Market Analysis”



How to Interpret a “Comparative Market Analysis”

Many people look only at sold data when doing a CMA (Comparative Market Analysis), but there are actually six important categories to look at.

1. Active – These are the homes that are currently on the market. Some of them may be new to the market, and others might have been on the market a long time due to overpricing. This category shows you exactly which homes you will be competing against. Look at these homes carefully for things about them that are more attractive or less attractive than your property to a potential buyer. Try to determine what will make you the most attractive opportunity on the market in terms of price and value.

2. Contingent – A contingent property is one that is under contract, but has contingencies that can let the buyer cancel, such as financing, home inspection, and having another home to sell. Until a property closes, the sales price is not public information so you may or may not be able to accurately use these properties as comparables for your home.

3. Pending – These properties are under contract, and all contingencies have been removed. Like contingent properties, the sales price is not always known.

4. Sold - These are the winners! Sold data is the most solid information because it tells you exactly what the market was willing to reward sellers with. By looking very carefully at these homes, you should be able to get a fairly good value range of what the market might reward you with.

5. Expired – These are the losers, the properties that were rejected by the market, and did not sell before the listing period with their agent expired. All of these properties were priced above what the market determined their value to be. You can use these to see how NOT to price your own house.

6. Withdrawn – Most of these were also rejected properties, and were pulled off the market before listing expiration because they were not getting any showings.

Every Home Has Three Prices

1. Tax Assessment

• The tax assessment value has nothing to do with the actual value of your home. The assessment office updates values annually, and it is based on a formula in your area. They don’t know anything about the specifics of your home, and they don’t keep up with current market trends.

2. Appraised Value

• Although what an appraiser says your home is worth is not true market value, it is still very important. If the appraised value is lower than the true market value, you will more than likely have to adjust your price down to the appraised value in order to close, unless the buyer is paying cash and is not getting an appraisal.

3. True Market Value

• Definition: what a buyer is actually willing to pay for your property.

• No appraiser, Realtor, neighbor, friend, family member, or tax assessor can tell you what the true market value of your home is unless they are actually backing their price up by putting down money to buy your property.

You have 100% control over your price.

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