Figuring out a fair price for your home is essential to selling real estate. If you’re just getting started with listing your home, figuring out the market value of your home can be challenging.
Your real estate agent can prepare a report to help buyers and sellers determine how to set your home’s asking price through a Comparative Market Analysis (CMA).
Keep reading to learn how you, a seller, can use a CMA to set an asking price. And if you’re a buyer, use a CMA to find out how much the home you’re eyeing is potentially worth.
What is a Comparative Market Analysis (CMA)?
A Comparative Market Analysis (CMA) of a home takes into consideration construction, location, size, age, style, condition, and other factors of the home to determine the proper value. This helps both the buyer and seller know at what price the house should be.
For sellers, a Comparative Market Analysis helps set the asking price, so you don’t overprice your home for sale. Overpricing your home can cause problems, including time, expense, and frustration. Setting the asking price of the house properly first will save problems later.
For buyers, a Comparative Market Analysis helps them know what a home is worth before putting in an offer. Further, it helps pinpoints a buyer’s proper price point so they know what kind of home they can purchase.
What’s included in a Comparative Market Analysis Report?
A Comparative Market Analysis report covers home value, but what all is included? Here’s a detailed guide of all that’s included in a CMA:
- Property Age: Older or “antique” properties can be of higher value. Newer homes have high value as well.
- Condition of the Property: Older homes that are in good shape can be of higher value. Newly-renovated homes can be high in value too. But remember, there’s nothing better for home value than regular home maintenance.
- Lot Size: The size of the lot can determine the price.
- Location of Lot: If the lot is in an urban area, it can be of higher value
compared to a rural lot. - Home Square Footage: Usually, larger homes are of higher value.
- The Number of Floors: The number of floors – including an attic or a basement –can impact the home’s value.
- Number of Bedrooms: The number of bedrooms and their size play a part in home value.
- Number of Bathrooms: The number of bathrooms, including half bathrooms, determines home value.
- Special Features: Is there a fireplace? Is there a patio or swimming pool? Is it a smart home? These unique features can add to the home’s value.
If you are selling your home, most of this information will be gathered by your realtor as in agreement terms of your listing agreement.
How to Use a CMA Report
After you receive a CMA report, you can use it in a few ways. Here’s a quick rundown of what you can do with with your report to help you put the projected value of the home to work.
Pricing Your Home For Sale
After all, the details are submitted, a home seller will better know how much to sell the house for. If you’re just starting out selling your home, it’s good to at least have a starting point.
This is where the CMA from a report from a realtor comes in.
Comparing Homes in the Seller’s Market
A CMA report compares the price of your home to other properties in the seller’s market area. The report looks at how much other homes have sold on the Multiple Listing System (MLS).
You can use these numbers to give you the advantage of knowing how much to set your home’s asking price for.
Making a Home Purchase Offer
For buyers, a CMA helps you know how much your should offer on a home you’re trying to buy. Simply, the report tells you if you can afford the home purchase offer you are making.
Suppose the Comparative Market Analysis report says it’s too expensive for you. In this case, it’s helpful to know before you get too far in the home-buying process.
The Rule of 3
An easy way to better understand your home’s value is by applying the Rule of 3. Multiply your take-home income and multiply it by three to calculate your property affordability.
Here’s an example: If you make $100,000 a year, multiply that by 3 to get $300,000. In theory, you can afford a home that costs $300,000. Although this formula isn’t foolproof, it’s a good place to start when considering your CMA.
Important Things to Remember About CMA’s
Comparative Market Analysis is NOT a home appraisal. The main difference is that a CMA is conducted by a realtor while a home appraisal is completed by a licensed contracted appraiser who the bank hires.
An appraisal happens after a buyer prepares to buy a home along with home inspections. It’s still best to compare a home appraisal with a CMA report to know how much your home is worth.
You Don’t Have to Price Your Home Yourself
It’s hard to know all the factors that go into pricing your home. That’s why you don’t have to do it by yourself!
You can request a CMA from 828 Real Estate. We are accurate, dependable, and precise in helping you know the price of your home.
We’ll help you set an asking price. Let 828 Real Estate sell your home today.