Comparative Market Analysis

What is a CMA Report?

A comparative market analysis, often referred to as a CMA, serves as a valuable resource wielded by real estate professionals to aid clients in ascertaining a property’s worth. This comprehensive report delves into the details of at least three recently sold properties akin to the one under scrutiny. Selection criteria for these comparable properties typically revolve around factors such as size, location, age, and quality, aiming to draw insightful parallels.

For prospective buyers and sellers, CMAs become instrumental in ensuring they formulate competitive offers for homes. Sellers leverage this tool to establish an accurate listing price for their properties.

What’s encompassed within a real estate CMA?

A CMA encompasses comprehensive descriptions and data points related to comparable properties, referred to as ‘comps.’ These comps are pivotal in shaping the fair market value of the property. Typically, the most reliable comp selections are homes that have exchanged hands within the preceding three to six months. However, in more rural settings or slower real estate markets, the quest for recently sold comps can prove to be a challenging endeavor.

Certain types of properties are often excluded from a CMA

A Comparative Market Analysis in Action

To illustrate the concept further, let’s consider a scenario where you express interest in a home currently listed at $230,000. This property is a single-family home in the city, boasting three bedrooms, two bathrooms, and falls within a reputable school district. Moreover, it features affordable HOA fees (under $100 per month) and has undergone recent updates, including fresh paint, new finishes, and enhanced landscaping.

In order to compile a comparative market analysis for you, your agent would base it on the following criteria:

1. Sold Date: Comparable properties are typically those sold within the past three to six months, or within the last year in rural areas.
2. Location: Comp properties often reside within the same school district, neighborhood, and share similar surroundings. For instance, if the property under scrutiny sits on a quiet cul-de-sac, the ideal comps should mirror this setting.
3. Size: Comps are selected based on the number of bedrooms and bathrooms, usable square footage, and the presence or absence of a basement and garage, closely matching the subject property.
4. Year built: Ideally, comps align in age unless one has undergone substantial renovations.
5. Quality: The chosen comps should feature similar updates, finishes, and overall maintenance standards.
6. Taxes and fees: Savvy real estate agents strive to identify comps with similar HOA assessments and tax figures. This meticulous matching process ensures that all relevant factors remain closely aligned.

It’s essential to acknowledge that no two homes are identical, and agents aim to find the closest match to the subject property while adjusting as necessary to deliver an informed estimate of the home’s value. For instance, valid comps may include:

• Comp 1, which sold for $235,000. It possesses one fewer bathroom, is on the same street, and exhibits similar finishes but features a smaller yard.
• Comp 2, which sold for $275,000. It boasts the same number of bedrooms and bathrooms, has a more recent build, and provides additional square footage due to a finished basement.
• Comp 3, which sold for $245,000. It shares the same number of bedrooms and bathrooms and similar size but lacks the same level of updates.

These comps would suggest that the home you’re eyeing falls within a value range of $255,000 to $270,000, providing you with valuable insight for formulating a competitive offer.

The Role of Price per Square Foot in a CMA

The inclusion of price per square foot in a CMA hinges on the local real estate market and the availability of suitable comps. Its relevance becomes apparent when evaluating homes with striking similarities. However, its applicability may vary, as it may not provide a reliable metric when comparing distinct property types, such as single-family homes to condos or newly renovated homes to outdated ones.