What is a CMA?

Website design By BotEap.com“CMA” is an abbreviation that real estate agents use for comparative market analysis. A CMA gives an estimated sales price for a property given current market conditions. It is prepared by a real estate agent and usually comes in the form of a report. Most residential real estate agents do not charge a fee to prepare a CMA.

Website design By BotEap.comAn agent must tour the property in question before preparing a CMA. Unless the house is huge, the inspection portion of the CMA agent shouldn’t take a lot of time, nor does the house have to be shown as a model home. However, the condition of the property affects the price. So if you plan to work on the property, let the agent know.

Website design By BotEap.comAfter the agent previews the property, research the Multiple Listing Service for information on similar properties in the area that have sold recently. To arrive at a current price estimate, an agent must analyze information about listings that have sold and closed, those that have sold but not yet closed (pending sales), active listings, and expired listings.

Website design By BotEap.comPending and sold listings provide the most reliable indicator of current market price. Active listings are an indicator of the current competition in the market. Expired listings are properties that were listed for sale but did not sell. Expired listings typically did not sell because they were priced too high for the market.

Website design By BotEap.comThe agent then compares the property to the listings found in the MLS search, and in doing so arrives at a probable sale price. Please note that the price derived from a CMA is somewhat subjective. Also, a CMA is not an evaluation. You must hire a licensed appraiser to complete an appraisal.

Website design By BotEap.comSellers must complete a CMA before listing their home for sale. Sellers who do not have a real estate agent often have multiple agents complete CMAs. This gives the seller a chance to meet different agents and see how they work.

Website design By BotEap.comYou may want a CMA even if you don’t plan to sell. For example, before you start on a major renovation, you may want to know how much you can spend without improving the neighborhood too much. The agent who sold you the property will be happy to prepare a CMA for you if you are still active in the local real estate market. If not, ask someone you know whose opinion you trust to recommend an agent.

Website design By BotEap.comBuyers should apply for a CMA on a property they are considering buying, especially if they are new to the area and have not had a chance to look at many listings.

Website design By BotEap.comFirst Time Tip: Regardless of whether you are a buyer or a seller, the agent preparing your CMA should actively work in the area where the property is located. The Internet has made it possible for virtually anyone to access comparable sales information. However, this information may be inadequate without first-hand knowledge of comparable properties and the local market.

Website design By BotEap.comFor example, property improvements often have a positive effect on the sale price. But if the upgrades are inferior in quality or design, they may lower the price rather than increase it. Suppose the information on a sold listing shows a remodeled kitchen. Without having seen the property, it’s hard to know how the remodel affected the price.

Website design By BotEap.comThe close: Don’t be surprised if a CMA offers a price range instead of a fixed price. You are more likely to see this in markets where there are variations in terms of property size, age, architectural style, and condition.