A comparative market analysis report is a critical tool for real estate professionals, buyers, and sellers. These in-depth reports are useful for considering new purchases, investment opportunities, or selling. In today’s post, we will tell you how to use comparative market analysis for your benefit.
What Is Comparative Market Analysis?
To understand how to use comparative market analysis, you need to first know what it is. Comparative market analysis (CMA) is an effective tool that real estate agents, sellers, buyers, and investors often use to research and create reports. The CMA is an organized compilation of data that tells you how much your home is worth in the current market. Inside a CMA, there is often a list of active, pending, sold, and expired listings. By comparing all of these factors and prices, you can gauge where you should price your home. Conversely, if you’re a buyer, you will be able to see what a fair price for a potential home is. Let’s look at each factor that goes into creating an effective CMA.
When it comes to real estate, there are an endless amount of things to think about. The CMA allows you to see a lot of angles in one place. The CMA is composed of various factors. This list is not all-inclusive, so there are some components left out for the sake of conciseness and clarity. Overall, these are the most important elements of a CMA that are factored into fair market pricing.
The active listings are a metric to look at to see what kind of competition you’re dealing with. The active listings will show you what you’re competing with for buyers. The asking prices on active listings are not an accurate representation of market price. Until the property is sold, the asking price is not important to look at.
Pending listings, like active listings, are not usable when pricing a home. Pending sales often hide the sold price, and you most likely won’t get the agent to expose it. Even though you don’t look at the price of pending listings, the amount of listings is something to be considered. If there are a large number of listings that are pending, this is an indication of the positive direction the market is headed.
Sold listings are the most accurate place to look when it comes to comparing prices. The sold price is the accurate representation of what comparable properties are selling for in the area. Sometimes, though, there are also other factors to consider, such as size, age, design, and more.
For the most part, if a listing has expired, it means a property was asking for too much. Expired listings are a great tool to use to see what is considered unreasonable in the current market. So, ideally, you would find a happy medium between low-priced property and expired listings.
A comparative market analysis is more than listing comparisons. It’s the combination of size, age, amenities, location, and condition. An effective CMA report looks at a home from all angles. If you’re interested in have a CMA done for your home or property, give Whitesell Real Estate Group a call today.